As filed with the Securities and Exchange Commission on March 8, 2010
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
WELLS FARGO VARIABLE TRUST
Area Code and Telephone Number: (800) 552-9612
Address of Principal Executive Offices, including Zip Code:
525 Market Street
San Francisco, California 94163
Name and Address of Agent for Service:
C. David Messman
c/oWellsFargo Funds Management, LLC
525 Market Street, 12th Floor
San Francisco, California 94105
With copies to:
Marco E. Adelfio, Esq.
GOODWIN PROCTER LLP
901 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20001
It is proposed that this filing will become effective on April 9, 2010 pursuant to Rule 488.
No filing fee is required under the Securities Act of 1933 because an indefinite number of shares of beneficial interest in the Registrant has previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
WELLS FARGO VARIABLE TRUST
PART A
PROSPECTUS/PROXY STATEMENT
EVERGREEN FUNDS
200 Berkeley Street
Boston, MA 02116-5034
1.800.343.2898
WELLS FARGO VARIABLE TRUST
525 Market Street
San Francisco, CA 94105
1.800.222.8222
____, 2010
Dear Investor,
On December 31, 2008, the parent company of the investment adviser to the Evergreen funds, Wachovia Corporation ("Wachovia"), and the parent company of the investment adviser to Wells Fargo Advantage Funds®, Wells Fargo & Company ("Wells Fargo"), merged. Since that date, the investment adviser to the Evergreen funds, Evergreen Investment Management Company, LLC ("EIMC"), and the investment adviser to Wells Fargo Advantage Funds, Wells Fargo Funds Management, LLC ("Funds Management"), have considered rationalizing and reorganizing their mutual fund businesses. After multiple presentations to and discussions with the Boards of Trustees of both the Evergreen funds and Wells Fargo Advantage Funds regarding these matters, on December 30, 2009, EIMC proposed to the Boards of Trustees of the Evergreen funds, and on January 11, 2010, Funds Management proposed to the Boards of Trustees of Wells Fargo Advantage Funds, the mergers outlined in the table below (each, a "Merger and collectively, the "Mergers"). Both the Boards of Trustees of the Evergreen funds and Wells Fargo Advantage Funds approved the proposed Mergers and the related Agreement and Plan of Reorganization subject to the approval by shareholders of each Target Fund, as part of a comprehensive set of mutual fund mergers across the two fund families.
As a result, if you are a contract owner, you are invited to vote on the proposal to merge your Target Fund into a corresponding Acquiring Fund shown in the table below (each a "Merger," and collectively, the "Mergers"). You may vote on the proposal by providing your voting instruction to your insurance company by completing, dating, signing and returning the enclosed voting instruction card in the postage-paid envelope provided. You may also provide voting instructions by telephone or the internet by following the instructions as outlined at the end of this prospectus/proxy statement. The Boards of Trustees of the Target Funds (shown in the table below) have unanimously approved the Mergers and recommend that you vote FOR these proposals.
Target Fund | Target Trust | Acquiring Fund | Acquiring Trust | |||||
Evergreen VA Core Bond Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Total Return Bond Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Omega Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Large Company Growth Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Special Values Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small/Mid Cap Value Fund1 | Wells Fargo Variable Trust | |||||
Evergreen VA Growth Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small Cap Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA International Equity Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT International Core Fund2 | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Equity Income Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT C&B Large Cap Value Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Fundamental Large Cap Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Large Company Core Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust |
1 | Effective May 1, 2010, the Fund's name will be changed to the Wells Fargo Advantage VT Small Cap Value Fund. |
2 | Immediately following the Merger, the Fund's name will be changed to the Wells Fargo Advantage VT International Equity Fund. |
If approved by shareholders, this is a general summary of how each Merger will work:
Each Target Fund will transfer all of its assets to the corresponding Acquiring Fund.
Each Acquiring Fund will assume all of the liabilities of the corresponding Target Fund.
Each Acquiring Fund will issue new shares that will be distributed to each shareholder in an amount equal to that shareholder's value of Target Fund shares.
If the Merger is consummated, each Target Fund shareholder will become a shareholder of the corresponding Acquiring Fund and will have his or her investment managed in accordance with the Acquiring Fund's investment strategies.
You will not incur any sales charges or similar transaction charges as a result of the Merger.
It is expected that the Merger will be a non-taxable event for shareholders for U.S. federal income tax purposes.
Details about each Target Fund's and each Acquiring Fund's investment goals, portfolio management team, past performance, principal risks, fees, and expenses, along with additional information about the proposed Mergers, are contained in the attached prospectus/proxy statement. Please read it carefully.
A special meeting of each Target Fund's shareholders will be held on June 8, 2010. Although shareholders are welcome to attend the meeting in person, they do not need to do so in order to vote shares. If you are a shareholder and do not expect to attend the meeting, please complete, date, sign and return the enclosed proxy card or voting instruction card in the postage-paid envelope provided. You may also vote by telephone or the internet by following the instructions as outlined at the end of this prospectus/proxy statement. If your Target Fund or insurance company does not receive your input after several weeks, you may receive a telephone call from The Altman Group, our proxy solicitor, requesting your input. If you have any questions about the Mergers, the proxy card, or voting instruction card, please call The Altman Group at (866) 342-1635 (toll-free).
IT IS IMPORTANT THAT PROXY CARDS OR VOTING INSTRUCTION CARDS BE RETURNED PROMPTLY. SHAREHOLDERS AND CONTRACT OWNERS ARE URGED TO SIGN WITHOUT DELAY AND RETURN THEIR PROXY CARD OR VOTING INSTRUCTION CARD, AS APPLICABLE, IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR TO PROVIDE INSTRUCTIONS USING ONE OF THE OTHER METHODS DESCRIBED AT THE END OF THE PROSPECTUS/PROXY STATEMENT SO THAT YOUR VIEWS MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE PROXY CARD OR VOTING INSTRUCTION CARD WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
Remember, your voice is important to us, no matter how large your investment. Please take this opportunity to provide your input. Thank you for taking this matter seriously and participating in this important process.
Sincerely,
Karla M. Rabusch
President
Wells Fargo Funds Trust
W. Douglas Munn
President
Evergreen Funds
EVERGREEN FUNDS
200 Berkeley Street
Boston, MA 02116-5034
1.800.343.2898
____, 2010
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 8, 2010
A Special Meeting (the "Meeting") of Shareholders of your Target Fund, a series of the Target Trust, each set forth in the table below, will be held at the offices of Wells Fargo Advantage Funds®, 525 Market Street, San Francisco, California 94105 on June 8, 2010 at 10:00 a.m., Pacific time.
Target Fund | Target Trust | Acquiring Fund | Acquiring Trust | |||||
Evergreen VA Core Bond Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Total Return Bond Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Omega Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Special Values Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small/Mid Cap Value Fund1 | Wells Fargo Variable Trust | |||||
Evergreen VA Growth Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small Cap Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA International Equity Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT International Core Fund2 | Wells Fargo Variable Trust | |||||
Evergreen VA Fundamental Large Cap Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust |
1 | Effective May 1, 2010, the Fund's name will be changed to the Wells Fargo Advantage VT Small Cap Value Fund. |
2 | Immediately following the Merger, the Fund's name will be changed to the Wells Fargo Advantage VT International Equity Fund. |
With respect to your Target Fund, the Meeting is being held for the following purposes:
To consider and act upon an Agreement and Plan of Reorganization (the "Plan") dated as of March 1, 2010, providing for the reorganization of the Target Fund, including the acquisition of all of the assets of the Target Fund by the corresponding Acquiring Fund in exchange for shares of the Acquiring Fund (the "Acquisition Shares") and the assumption by the Acquiring Fund of all of the liabilities of the Target Fund. The Plan also provides for the prompt distribution of the Acquisition Shares to shareholders of the corresponding Target Fund in liquidation of the Target Fund.
To transact any other business which may properly come before the Meeting or any adjournment(s) thereof.
Any adjournment(s) of the Meeting will be held at the above address. The Board of Trustees of your Target Fund has fixed the close of business on March 10, 2010 as the record date (the "Record Date") for the Meeting. Only shareholders of record as of the close of business on the Record Date will be entitled to this notice, and to vote at the Meeting or any adjournment(s) thereof.
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. ALL SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THEIR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR TO VOTE USING ONE OF THE OTHER METHODS DESCRIBED AT THE END OF THE PROSPECTUS/PROXY STATEMENT SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY CARD WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By order of the Board of Trustees,
Michael H. Koonce
Secretary
WELLS FARGO VARIABLE TRUST
525 Market Street
San Francisco, CA 94105
1.800.222.8222
____, 2010
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 8, 2010
A Special Meeting (the "Meeting") of Shareholders of your Target Fund, a series of the Target Trust, each set forth in the table below, will be held at the offices of Wells Fargo Advantage Funds®, 525 Market Street, San Francisco, California 94105 on June 8, 2010 at 12:00 p.m., Pacific time.
Target Fund | Target Trust | Acquiring Fund | Acquiring Trust | |||||
Wells Fargo Advantage VT Large Company Growth Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Equity Income Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT C&B Large Cap Value Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Large Company Core Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust |
With respect to your Target Fund, the Meeting is being held for the following purposes:
To consider and act upon an Agreement and Plan of Reorganization (the "Plan") dated as of March 1, 2010, providing for the reorganization of the Target Fund, including the acquisition of all of the assets of the Target Fund by the corresponding Acquiring Fund in exchange for shares of the Acquiring Fund (the "Acquisition Shares") and the assumption by the Acquiring Fund of all of the liabilities of the Target Fund. The Plan also provides for distribution of the Acquisition Shares to shareholders of the corresponding Target Fund and the subsequent liquidation and dissolution of the Target Fund. A vote in favor of the Plan is a vote in favor of the liquidation and dissolution of the Target Fund.
To transact any other business which may properly come before the Meeting or any adjournment(s) thereof.
Any adjournment(s) of the Meeting will be held at the above address. The Board of Trustees of your Target Fund has fixed the close of business on March 10, 2010, as the record date (the "Record Date") for the Meeting. Only shareholders of record as of the close of business on the Record Date will be entitled to this notice, and to vote at the Meeting or any adjournment(s) thereof.
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN WITHOUT DELAY AND RETURN PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR TO VOTE USING ONE OF THE OTHER METHODS DESCRIBED AT THE END OF THE PROSPECTUS/PROXY STATEMENT SO THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY CARD WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By order of the Board of Trustees,
C. David Messman
Secretary
EVERGREEN FUNDS
200 Berkeley Street
Boston, MA 02116-5034
1.800.343.2898
WELLS FARGO VARIABLE TRUST
525 Market Street
San Francisco, CA 94105
1.800.222.8222
____, 2010
PROSPECTUS/PROXY STATEMENT
This prospectus/proxy statement contains information you should know before voting [or providing voting instructions] on the proposed merger (the "Merger") of your Target Fund into the corresponding Acquiring Fund as set forth and defined in the table below, each of which is a series of a registered open-end management investment company. Your Target Fund serves as an underlying investment option for certain variable annuity contracts and variable life insurance policies (collectively, the "Variable Contracts"). Although insurance company separate accounts are the predominant record owners of your Target Fund's shares, the insurance companies are required to solicit voting instructions from owners of the Variable Contracts issued by those insurance companies, and generally vote all Funds' shares proportionately in accordance with timely received instructions. As a result, if you are a contract owner of a Variable Contract, you are being asked to provide voting instructions on the Merger. If approved, the Merger will result in your receiving shares or an interest in shares of the Acquiring Fund in exchange for your shares or interest in shares of the Target Fund.
Target Fund | Target Trust | Acquiring Fund | Acquiring Trust | |||||
Evergreen VA Core Bond Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Total Return Bond Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Omega Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Large Company Growth Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Omega Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Special Values Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small/Mid Cap Value Fund1 | Wells Fargo Variable Trust | |||||
Evergreen VA Growth Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Small Cap Growth Fund | Wells Fargo Variable Trust | |||||
Evergreen VA International Equity Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT International Core Fund2 | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Equity Income Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT C&B Large Cap Value Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Intrinsic Value Fund | Wells Fargo Variable Trust | |||||
Evergreen VA Fundamental Large Cap Fund | Evergreen Variable Annuity Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust | |||||
Wells Fargo Advantage VT Large Company Core Fund | Wells Fargo Variable Trust | Wells Fargo Advantage VT Core Equity Fund | Wells Fargo Variable Trust |
1 | Effective May 1, 2010, the Fund's name will be changed to the Wells Fargo Advantage VT Small Cap Value Fund. |
2 | Immediately following the Merger, the Fund's name will be changed to the Wells Fargo Advantage VT International Equity Fund. |
The Target and Acquiring Funds listed above are collectively referred to as the "Funds." The Target and Acquiring Trusts listed above are collectively referred to as the "Trusts."
Please read this prospectus/proxy statement carefully and retain it for future reference. Additional information concerning each Fund and/or Merger has been filed with the Securities and Exchange Commission ("SEC").
The prospectuses of each Target Fund and each Acquiring Fund (other than the Wells Fargo Advantage VT Core Equity Fund, the Wells Fargo Advantage VT Intrinsic Value Fund and the Wells Fargo Advantage VT Omega Growth Fund) are incorporated into this document by reference and are legally deemed to be part of this prospectus/proxy statement.
The Statement of Additional Information relating to this prospectus/proxy statement (the "Merger SAI"), dated the same date as this prospectus/proxy statement, is also incorporated into this document by reference and is legally deemed to be part of this prospectus/proxy statement.
The Statement of Additional Information ("SAI"), and the annual and semi-annual reports of each Target Fund and each Acquiring Fund (other than the Wells Fargo Advantage VT Core Equity Fund, the Wells Fargo Advantage VT Intrinsic Value Fund and the Wells Fargo Advantage VT Omega Growth Fund) are incorporated into the Merger SAI by reference and are legally deemed to be part of the Merger SAI.
A copy of your Acquiring Fund's prospectus (other than the Wells Fargo Advantage VT Core Equity Fund, the Wells Fargo Advantage VT Intrinsic Value Fund and the Wells Fargo Advantage VT Omega Growth Fund) accompanies this prospectus/proxy statement.
Copies of these documents pertaining to an Evergreen Target Fund are available upon request without charge by writing to the address above, calling 1.800.343.2898 or visiting the Evergreen Funds' Web site at www.evergreeninvestments.com. Copies of these documents pertaining to a Wells Fargo Target Fund and Acquiring Fund (other than the Wells Fargo Advantage VT Core Equity Fund, the Wells Fargo Advantage VT Intrinsic Value Fund and the Wells Fargo Advantage VT Omega Growth Fund) are available upon request without charge by writing to Wells Fargo Advantage Funds®, P.O. Box 8266, Boston, MA 02266-8266, calling 1.800.222.8222 or visiting the Wells Fargo Advantage Funds Web site at www.wellsfargo.com/advantagefunds.
The Wells Fargo Advantage VT Core Equity Fund, the Wells Fargo Advantage VT Intrinsic Value Fund and the Wells Fargo Advantage VT Omega Growth Fund are each a "Shell Fund" being registered with the SEC in order to receive the assets and assume the liabilities of its corresponding Target Fund. As such, prospectuses, SAIs and annual and semi-annual reports for these Acquiring Funds are not yet available as of the date of this prospectus/proxy statement. Additional information about these Acquiring Funds may be found in Exhibit E and the Merger SAI.
You may also view or obtain these documents from the SEC: by phone at 1.800.SEC.0330 (duplicating fee required); in person or by mail at Public Reference Section, Securities and Exchange Commission, 100 F. Street, N.E., Washington, D.C. 20549-0213 (duplicating fee required); by email at publicinfo@sec.gov (duplicating fee required); or by internet at www.sec.gov.
The SEC has not approved or disapproved these securities or determined if this prospectus/proxy statement is truthful or complete. Any representation to the contrary is a criminal offense.
The shares offered by this prospectus/proxy statement are not deposits of a bank, and are not insured, endorsed or guaranteed by the FDIC or any government agency and involve investment risk, including possible loss of your original investment.
Evergreen VA Core Bond Fund |
Evergreen VA Diversified Capital Builder Fund |
Evergreen VA Diversified Income Builder Fund |
Evergreen VA Fundamental Large Cap Fund |
Evergreen VA Growth Fund |
Evergreen VA High Income Fund |
Evergreen VA International Equity Fund |
Evergreen VA Omega Fund |
Evergreen VA Special Values Fund |
WF VT Asset Allocation Fund |
WF VT C&B Large Cap Value Fund |
WF VT Discovery Fund |
WF VT Equity Income Fund |
WF VT International Core Fund |
WF VT Large Company Core Fund |
WF VT Large Company Growth Fund |
WF VT Opportunity Fund |
WF VT Small Cap Growth Fund |
WF VT Small/Mid Cap Value Fund |
WF VT Total Return Bond Fund |
Table of Contents
OVERVIEW
The Funds are underlying investment vehicles for certain variable annuity contracts and/or variable life insurance policies offered through separate accounts of participating insurance companies. Depending on the context, references to "you" or "your" in this summary refer either to the holder of a variable annuity contract or variable insurance policy who may select Fund shares to fund his or her investment in the policy or contract or to the insurance company that issues the contract or policy. Throughout this summary, references to a Fund "shareholder" refer only to the insurance company investing in the Fund through a separate account, and not to a holder of a variable annuity contract or variable insurance policy.
This section summarizes the primary features and consequences of your Merger. This summary is qualified in its entirety by reference to the information contained elsewhere in this prospectus/proxy statement, in the Merger SAI, in each Fund's prospectus (other than the Wells Fargo Advantage VT Omega Growth Fund, the Wells Fargo Advantage VT Core Equity Fund, and the Wells Fargo Advantage VT Intrinsic Value Fund), in each Fund's financial statements contained in the annual and semi-annual reports (other than the Wells Fargo Advantage VT Omega Growth Fund, the Wells Fargo Advantage VT Core Equity Fund, and the Wells Fargo Advantage VT Intrinsic Value Fund), and in each Fund's SAI (other than the Wells Fargo Advantage VT Omega Growth Fund, the Wells Fargo Advantage VT Core Equity Fund, and the Wells Fargo Advantage VT Intrinsic Value Fund), and to the Agreement and Plan of Reorganization (the "Plan"), a form of which is attached as Exhibit A hereto.
Key Features of the Mergers
The Plan sets forth the key features of each Merger and generally provides for the following:
the transfer of all of the assets of the Target Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund;
the assumption by the Acquiring Fund of all of the liabilities of the Target Fund;
the liquidation of the Target Fund by distributing the shares of the Acquiring Fund to the Target Fund's shareholders; and
the assumption of the costs of each Merger (other than costs incurred from securities transactions in connection with the Merger) by Wells Fargo Funds Management, LLC ("Funds Management") and/or Evergreen Investment Management Company, LLC ("EIMC") or one of its affiliates.
The Mergers are scheduled to take place on or about _______. For a more complete description of the Mergers, see the section entitled "Agreement and Plan of Reorganization," as well as Exhibit A.
Board of Trustees Recommendation
At a meeting held on December 30, 2009 for the Boards of Trustees of the Evergreen funds, and on January 11, 2010 for the Board of Trustees of the Wells Fargo Advantage Funds, the Trustees of your Target Fund, including a majority of the Trustees who are not "interested persons" of your Target Fund, as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent Trustees"), considered and unanimously approved the Merger of your Target Fund.
Before approving the Mergers, the Trustees reviewed, among other things, information about the Funds and the proposed transactions. Those materials set forth a comparison of various factors, such as the relative sizes of the Funds, the performance records of the Funds, and the expenses of the Funds (including pro forma expense information of each surviving fund following the Mergers), as well as similarities and differences between the Funds' investment goals, principal investment strategies and specific portfolio characteristics.
The Board of Trustees of your Target Fund, including all of the Independent Trustees, has concluded that the Merger would be in the best interests of your Target Fund, and that existing shareholders' interests would not be diluted as a result of the Merger. Accordingly, the Trustees have submitted the Plan to the Target Fund's shareholders and unanimously recommend its approval. The Board of Trustees of the Wells Fargo Advantage Funds has also approved the Plan on behalf of each Acquiring Fund.
For further information about the considerations of each Target Trust's Board, please see the section entitled "Reasons for the Mergers."
Merger Summary (Goals, Strategies, Risks, Performance, Expense, Management and Tax Information)
The following section provides a comparison between the Funds with respect to their investment goals, principal investment strategies, fundamental investment policies, risks, performance records, sales charges and expenses. It also provides information about what the management and share class structure of your Acquiring Fund will be after the Merger. The information below is only a summary; for more detailed information, please see the rest of this prospectus/proxy statement and each Fund's prospectus and SAI (other than for the Wells Fargo Advantage VT Omega Growth Fund, the Wells Fargo Advantage VT Core Equity Fund and the Wells Fargo Advantage VT Intrinsic Value Fund, for which information can be found in Exhibit E of this prospectus/proxy statement and the Merger SAI). In this section, percentages of a Wells Fargo Advantage Fund's "net assets" are measured as percentages of net assets plus borrowings for investment purposes. References to "we" in the principal investment strategy discussion for a Wells Fargo Advantage Fund generally refer to Funds Management, a sub-adviser or the portfolio manager(s).
EVERGREEN VA CORE BOND FUND INTO WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA Core Bond Fund: | You will get this class of shares of Wells Fargo Advantage VT Total Return Bond Fund: | ||||
Class 2 | Class 21 |
1 | Upon completion of the proposed Merger, the Fund will rename its existing single class of shares as Class 2 shares. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
The Funds' investment goals and investment strategies are similar. Evergreen VA Core Bond Fund seeks to maximize total return through a combination of current income and capital growth. The Wells Fargo Advantage VT Total Return Bond Fund seeks total return, consisting of income and capital appreciation. Each Fund normally invests 80% of its assets in investment-grade debt securities. One difference between the Funds' investment strategies is that the Wells Fargo Advantage VT Total Return Bond Fund limits the amount it may invest in asset-backed securities other than mortgage-backed securities to 25% of its total assets, while the Evergreen VA Core Bond Fund has no such limit. This means the Evergreen VA Core Bond Fund may have a greater percentage of its assets invested in asset-backed securities. Furthermore, the Wells Fargo Advantage VT Total Return Bond Fund may invest up to 20% of its assets in U.S. dollar-denominated debt securities of foreign issuers, while investing in these securities is not principal investment strategy of Evergreen VA Core Bond Fund. This means that the Wells Fargo Advantage VT Total Return Bond Fund may invest in foreign securities to a greater extent than Evergreen VA Core Bond Fund.
Also, the Wells Fargo Advantage VT Total Return Bond Fund seeks to maintain its dollar-weighted average duration within a narrower range, 4 to 5½ years, than does Evergreen VA Core Bond Fund, 2 to 6 years. This means that the Wells Fargo Advantage VT Total Return Bond Fund's portfolio may be more sensitive to movements in prevailing interest rates that Evergreen VA Core Bond Fund's portfolio than under certain circumstances.
A more complete description of each Fund's investment goals and strategies is below.
EVERGREEN VA CORE BOND FUND (Target Fund) | WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks to maximize total return through a combination of current income and capital growth. | The Fund seeks total return, consisting of income and capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund normally invests at least 80% of its assets in U.S. dollar-denominated investment grade debt securities, including debt securities issued or guaranteed by the U.S. Government or by an agency or instrumentality of the U.S. government, corporate bonds, mortgage-backed securities (including collateralized mortgage obligations ("CMOs")), asset-backed securities, and other income producing securities. The Fund currently maintains a bias toward corporate and mortgage-backed securities. The Fund may invest a substantial portion of its assets (including a majority of its assets) in CMOs or other mortgage- or asset-backed securities. The remaining 20% of the Fund's assets may be represented by cash or invested in cash equivalents or shares of registered investment companies, including money market or fixed-income funds. | Under normal circumstances, we invest at least 80% of the Fund's net assets in bonds; at least 80% of the Fund's total assets in investment-grade debt securities; up to 25% of the Fund's total assets in asset-backed securities, other than mortgage-backed securities; and up to 20% of the Fund's total assets in U.S. dollar-denominated debt securities of foreign issuers. We invest principally in investment-grade debt securities, including U.S. Government obligations, corporate bonds and mortgage- and asset-backed securities. | ||||
Security ratings are determined at the time of investment based on ratings received by nationally recognized statistical ratings organizations or, if a security is not rated, it will be deemed to have the same rating as a security determined to be of comparable quality by the Fund's portfolio manager. If a security is rated by more than one nationally recognized statistical ratings organization, the highest rating is used. The Fund may retain any security whose rating has been downgraded after purchase if the Fund's portfolio manager considers the retention advisable. | The Fund invests in debt securities that it believes offer competitive returns and are undervalued, offering additional income and/or price appreciation potential, relative to other debt securities of similar credit quality and interest rate sensitivity. From time to time, the Fund may also invest in unrated bonds that it believes are comparable to investment-grade debt securities. | ||||
As part of its investment strategy, the Fund may engage in dollar roll transactions, which allow the Fund to sell a mortgage-backed security to a dealer and simultaneously contract to repurchase a security that is substantially similar in type, coupon and maturity, on a specified future date. Dollar roll transactions may create investment leverage. | As part of its investment strategy, the Fund may invest in stripped securities or enter into mortgage dollar rolls and reverse repurchase agreements, as well as invest in U.S. dollar-denominated debt securities of foreign issuers. | ||||
The Fund intends to limit its dollar-weighted average duration to a two-year minimum and a six-year maximum, while the dollar-weighted average maturity is expected to be longer than the dollar-weighted average duration. | Under normal circumstances, the Fund expects to maintain an overall dollar-weighted average effective duration range between 4 and 5 1/2 years. | ||||
The Fund may, but will not necessarily, use a variety of derivative instruments, such as futures contracts, options and swaps, including, for example, index futures, Treasury futures, Eurodollar futures, interest rate swap agreements, credit default swaps and total return swaps. The Fund typically uses derivatives as a substitute for taking a position in the underlying asset or basket of assets and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate risk. | The Fund may also use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | The Fund may sell a security that has achieved its desired return or if it believes the security or its sector has become overvalued. The Fund may also sell a security if a more attractive opportunity becomes available or if the security is no longer attractive due to its risk profile or as a result of changes in the overall market environment. The Fund may actively trade portfolio securities. | ||||
The Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Total Return Bond Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although both Funds may be subject to the risks listed below, they may be subject to a particular risk to different degrees. For example, because investing in foreign issuers is not a part of the principal investment strategy for Evergreen VA Core Bond Fund, an investment in the Wells Fargo Advantage VT Total Return Bond Fund may be subject to foreign investment risk to a greater extent than an investment in Evergreen VA Core Bond Fund.
Principal Risks
Active Trading Risk
Counter-Party Risk
Debt Securities Risk
Derivatives Risk
Foreign Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Mortgage and Asset-Backed Securities Risk
Regulatory Risk
Stripped Securities Risk
U.S. Government Obligations Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth in the Fund's prospectus and SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Fund's returns have varied from year to year and compare the each Fund's returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar charts and tables do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown.
Year-by-Year Total Return for Class 2 Shares (%) for Evergreen VA Core Bond Fund
Highest Quarter: | 2nd Quarter 2009 | +6.84% |
Lowest Quarter: | 3rd Quarter 2008 | -9.76% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT Total Return Bond Fund
Highest Quarter: | 3rd Quarter 2009 | +4.96% |
Lowest Quarter: | 2nd Quarter 2004 | -2.33% |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Evergreen VA Core Bond Fund | Inception Date of Share Class | 1 Year | 5 Year | Performance Since 7/31/2002 | ||||||
Class 2 | 7/31/2002 | 7.89% 7.89% | -0.68% -0.68% | 1.10% 1.10% | ||||||
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes) | 5.93% 5.93% | 4.97% 4.97% | 5.16% 5.16% |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Total Return Bond Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Single Class | 9/20/1999 | 11.99% 11.99% | 5.19% 5.19% | 6.40% 6.40% | ||||||
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes) | 5.93% 5.93% | 4.97% 4.97% | 6.33% 6.33% |
1 | The Barclays Capital U.S. Aggregate Bond Index is composed of the Barclays Capital U.S. Government/Credit Index and the Barclays Capital U.S. Mortgage-Backed Securities Index, and includes Treasury issues, agency issues, corporate bond issues, and mortgage-backed securities. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for both the Target and the Acquiring Funds set forth in the following tables are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. Exhibit C contains expense tables and examples for both the Target and Acquiring Funds based upon the actual expenses incurred by such Funds during their most recently completed fiscal years. Exhibit C also includes pro forma expense tables and examples for the Acquiring Fund based on the date of the Acquiring Fund's most recent financial statements.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Core Bond Fund | ||||
Total Annual Fund Operating Expenses1 | ||||
Class 2 | 1.02% 1.02% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies. |
Wells Fargo Advantage VT Total Return Bond Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.41% 1.41% | 0.90% 0.90% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Total Return Bond Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1,2 | |||||
Class 2 | 1.15% 1.15% | 0.92% 0.92% |
1 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
2 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.90% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA Core Bond Fund and the Wells Fargo Advantage VT Total Return Bond Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of each Fund under each Fund's Distribution Plan are the same, 0.25% of the Fund's average daily net assets.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, the Evergreen VA Core Bond Fund's portfolio turnover rate was 510% of the average value of its portfolio and the Wells Fargo Advantage VT Total Return Bond Fund's portfolio turnover rate was 580% of the average value of its portfolio.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated Wells Capital Management Incorporated | |
Portfolio Managers | Troy Ludgood Thomas O'Connor, CFA |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
EVERGREEN VA OMEGA FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND INTO WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND
In addition to your Target Fund, shareholders in one or more other Target Funds are being asked to approve a Merger into your Acquiring Fund. Your Merger is not contingent upon approval of any other Merger by shareholders of any other Target Fund.
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA Omega Fund: | You will get this class of shares of Wells Fargo Advantage VT Omega Growth Fund1: | ||||
Class 1 | Class 1 | ||||
Class 2 | Class 2 |
1 | The Fund is a shell fund ("Shell Fund") being created to receive the assets of one or more Target Funds. |
If you own this class of shares of Wells Fargo Advantage VT Large Company Growth Fund: | You will get this class of shares of Wells Fargo Advantage VT Omega Growth Fund1: | ||||
Single Class | Class 2 |
1 | The Fund is a shell fund ("Shell Fund") being created to receive the assets of one or more Target Funds. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
Evergreen VA Omega Fund and Wells Fargo Advantage VT Omega Growth Fund. The Funds' investment goals and investment strategies are similar. Evergreen VA Omega Fund seeks long-term capital growth, while the Wells Fargo Advantage VT Omega Growth Fund seeks long-term capital appreciation. Evergreen VA Omega Fund invests its assets in the equity securities of companies of all market capitalizations, while the Wells Fargo Advantage VT Omega Growth Fund normally invests at least 80% of its assets in equity securities. Both Funds employ a growth style of investing. One difference is that the Wells Fargo Advantage VT Omega Growth Fund may invest up to 25% of its assets in equity securities of foreign issuers, while Evergreen VA Omega Fund does not invest in equity securities of foreign issuers as a part of its principal investment strategy. This means that the Wells Fargo Advantage VT Omega Growth Fund may invest in foreign securities to a greater extent than Evergreen VA Omega Fund.
A more complete description of each Fund's investment goals and strategies is below.
EVERGREEN VA OMEGA FUND (Target Fund) | WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks long-term capital growth. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund invests primarily, and under normal conditions substantially all of its assets, in common stocks of U.S. companies of any market capitalization. | Under normal circumstances, we invest at least 80% of the Fund's total assets in equity securities; and up to 25% of the Fund's total assets in equity securities of foreign issuers, including ADRs and similar investments. We invest principally in equity securities of companies of all market capitalizations. | ||||
The Fund's portfolio manager employs a growth style of equity management that seeks to emphasize companies with cash flow growth, sustainable competitive advantages, returns on invested capital above their cost of capital and the ability to manage for profitable growth that can create long-term value for shareholders. | The goal of the Fund's fundamental investment process is to identify the small number of high quality companies capable of sustaining above average, long-term cash flow growth and then to invest at a significant discount to its valuation estimate to create long-term value for investors. The Fund's strategy is focused on firms with a strong business franchise that, because of their structural advantages, are best-positioned to benefit from the secular growth trends in their industry. The Fund's investment process is forward looking. Because the Fund approaches research from the perspective of a potential owner, it focuses on future cash flows for measuring intrinsic value. Through fundamental, bottom-up analysis, the Fund forms distinct, company-specific insights. The Fund's disciplined scrutiny of upside potential and downside risk gives it the confidence to make long-term investments regardless of the short-term impact of business cycles. The Fund's portfolio is constructed company by company, based on the Fund's level of conviction. The Fund's portfolio typically has a low average turnover and typically holds 35-60 stocks. | ||||
The Fund may, but will not necessarily, use derivatives. | The Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
A Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | The Fund's sell decisions are similarly driven by its long-term fundamental analysis. Always vigilant of the overall portfolio's risk-return profile, the Fund would also sell a stock if it found a more attractive candidate with a better margin of safety. | ||||
A Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or in money market instruments, including U.S.Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Wells Fargo Advantage VT Large Company Growth Fund and Wells Fargo Advantage VT Omega Growth Fund. The Funds' investment goals are identical, and their investment strategies are similar. Each Fund seeks long-term capital appreciation. The Wells Fargo Advantage VT Large Company Growth Fund normally invests at least 80% of its net assets in the equity securities of large-capitalization companies, while the Wells Fargo Advantage VT Omega Growth Fund invests at least 80% of its total assets in equity securities of companies of all market capitalizations. This means that an investment in the Wells Fargo Advantage VT Omega Growth Fund may be more sensitive to the price fluctuation of securities of small and medium-cap companies. Another difference is that the Wells Fargo Advantage VT Omega Growth Fund may invest up to 25% of its assets [directly] in equity securities of foreign issuers, while the Wells Fargo Advantage VT Large Company Growth Fund may invest up to 20% of its assets in the equity securities of foreign issuers only through ADRs adn similar investments. This means that the Wells Fargo Advantage VT Omega Growth Fund may invest in the equity securities of foreign issuers to a greater extent than the Wells Fargo Advantage VT Large Company Growth Fund.
A more complete description of each Fund's investment goals and strategies is below.
WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND (Target Fund) | WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks long-term capital appreciation. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of large-capitalization companies and up to 20% of its total assets in equity securities of foreign issuers through ADRs and similar investments. The Fund invest principally in equity securities, focusing on approximately 30 to 50 large capitalization companies that the Fund believes have favorable growth potential. However, the Fund normally does not invest more than 10% of its total assets in the securities of a single issuer. The Fund defines large-capitalization companies as those with market capitalizations of $3 billion or more. | Under normal circumstances, we invest at least 80% of the Fund's total assets in equity securities; and up to 25% of the Fund's total assets in equity securities of foreign issuers, including ADRs and similar investments. We invest principally in equity securities of companies of all market capitalizations. | ||||
In selecting securities for the Fund, the Fund seeks companies that it believes are able to sustain rapid earnings growth and high profitability over a long time horizon. The Fund seeks companies that have high quality fundamental characteristics, including: dominance in their niche or industry; low cost producers; low levels of leverage; potential for high and defensible returns on capital; and management and a culture committed to sustained growth. The Fund utilizes a bottom-up approach to identify companies that are growing sustainable earnings at least 50% faster than the average of the companies comprising the S&P 500 Index. | The goal of the Fund's fundamental investment process is to identify the small number of companies capable of sustaining above average, long-term cash flow growth and then to invest at a significant discount to its valuation estimate to create long-term value for investors. The Fund's strategy is focused on firms with a strong business franchise that, because of their structural advantages, are best-positioned to benefit from the secular growth trends in their industry. The Fund's investment process is forward looking. Because it approaches the research task from the perspective of a potential owner, the Fund focuses on future cash flows for measuring intrinsic value. Through a fundamental, bottom-up analysis, the Fund forms distinct, company-specific insights. A disciplined scrutiny of upside potential and downside risk gives the Fund the confidence to make long-term investments regardless of the short-term impact of business cycles. The Fund's portfolio is constructed company by company, based on its level of conviction. The Fund's portfolio typically has a low average turnover and typically holds 35-60 stocks. | ||||
Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund may sell a holding if it believes the holding will no longer produce anticipated growth and profitability, or if the security is no longer favorably valued. | The Fund's sell decisions are similarly driven by its long-term fundamental analysis. Always vigilant of the overall portfolio's risk-return profile, the Fund would also sell a stock if it found a more attractive candidate with a better margin of safety. | ||||
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. | The Fund may hold some of its assets in cash or in money market instruments, including U.S.Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Omega Growth Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees. For example, because Evergreen VA Omega Fund does not invest in equity securities of foreign issuers as part of its principal investment strategy, an investment in the Wells Fargo Advantage VT Omega Growth Fund may be subject to foreign investment risk to a greater extent than an investment in Evergreen VA Omega Fund.
Because the Wells Fargo Advantage VT Omega Growth Fund invests more of its assets in companies of all market capitalizations than the Wells Fargo Advantage VT Large Company Growth Fund, an investment in the Wells Fargo Advantage VT Omega Growth Fund may be subject to smaller company securities risk to a greater extent than an investment in the Wells Fargo Advantage VT Large Company Growth Fund. In addition, because the Wells Fargo Advantage VT Omega Growth Fund may invest more of its total assets in equity securities of foreign issuers than the Wells Fargo Advantage VT Large Company Growth Fund, an investment in the Wells Fargo Advantage VT Omega Growth Fund may be subject to foreign investment risk to a greater extent than an investment in the Wells Fargo Advantage VT Large Company Growth Fund.
Principal Risks
Counter-Party Risk
Derivatives Risk
Foreign Investment Risk
Growth Style Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Smaller Company Securities Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth for the Target Fund in the Fund's prospectus and SAI and, for the Acquiring Fund, in this prospectus/proxy statement and the Merger SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Target Funds' returns have varied from year to year and compare the Target Funds' returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar chart and table do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown. Since the Acquiring Fund is a Shell Fund, it has not yet commenced operations and therefore performance information for the Acquiring Fund is not yet available.
Year-by-Year Total Return for Class 2 Shares (%) for Evergreen VA Omega Fund
Highest Quarter: | 1st Quarter 2000 | +20.94%1 |
Lowest Quarter: | 4th Quarter 2000 | -25.00%1 |
Year-by-Year Total Return (%) for Wells Fargo VT Large Company Growth Fund
Highest Quarter: | 4th Quarter 2001 | +18.25% |
Lowest Quarter: | 4th Quarter 2008 | -23.79% |
Average Annual Total Returns for the periods ended 12/31/20091 | ||||||||||
Evergreen VA Omega Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 1 | 3/6/1997 | 43.97% 43.97% | 5.26% 5.26% | 0.77% 0.77% | ||||||
Class 2 | 7/31/2002 | 43.58% 43.58% | 4.98% 4.98% | 0.57% 0.57% | ||||||
Russell 1000 Growth Index (reflects no deduction for fees, expenses, or taxes) | 37.21% 37.21% | 1.63% 1.63% | -3.99% -3.99% |
1 | Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class' 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, 10 year returns for Class 2 would have been lower. |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Large Company Growth Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Single Class | 9/20/1999 | 43.38% 43.38% | 0.36% 0.36% | -2.81% -2.81% | ||||||
Russell 1000 Growth Index (reflects no deduction for fees, expenses, or taxes) | 37.21% 37.21% | 1.63% 1.63% | -3.99% -3.99% |
1 | The Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for the Target Fund set forth in the following table are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. If the Merger of Wells Fargo Advantage VT Large Company Growth Fund with the Acquiring Fund was the only Merger proposed, the pro forma expenses shown would have been approximately the same. The pro forma expense table below labeled "Wells Fargo Advantage VT Omega Growth Fund (Pro Forma Assuming Merger of Wells Fargo Advantage VT Large Company Growth Fund Only with Acquiring Fund)" shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming only the Merger of Wells Fargo Advantage VT Large Company Growth Fund with the Acquiring Fund had taken place at the beginning of that period. Exhibit C contains expense tables and examples for the Target Fund based upon the actual expenses incurred by the Target Fund during its most recently completed fiscal year. Exhibit C also includes a pro forma expense table and examples for the Acquiring Fund based on the date of the Target Funds' most recent financial statements. Since the Acquiring Fund has not yet commenced operations, the information presented is based on estimates.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Omega Fund | ||||
Total Annual Fund Operating Expenses | ||||
Class 1 | 0.75% 0.75% | |||
Class 2 | 1.00% 1.00% |
Wells Fargo Advantage VT Large Company Growth Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.20% 1.20% | 1.00% 1.00% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Omega Growth Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 1 | 0.80% 0.80% | 0.75% 0.75% | ||||
Class 2 | 1.05% 1.05% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Omega Growth Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 2 | 1.12% 1.12% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA Omega Fund, the Wells Fargo Advantage VT Large Company Growth Fund, and the Wells Fargo Advantage VT Omega Growth Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of Evergreen VA Omega Fund pursuant to the Fund's Distribution Plan are 0.25%. Class 1 shares of Evergreen VA Omega Fund do not pay a 12b-1 fee. The fees charged to Class 2 shares of the Wells Fargo Advantage VT Omega Growth Fund pursuant to the Fund's Distribution Plan are 0.25%. Class 1 shares of the Wells Fargo Advantage VT Omega Growth Fund do not pay a 12b-1 fee. The fees charged to the single class of shares of the Wells Fargo Advantage VT Large Company Growth Fund pursuant to the Fund's Distribution Plan are 0.25%.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, Evergreen VA Omega Fund's portfolio turnover rate was 28% of the average value of its portfolio and the Wells Fargo Advantage VT Large Company Growth Fund's portfolio turnover rate was 27% of the average value of its portfolio. Since the Acquiring Fund has yet to commence operations, its portfolio turnover rate is not yet available.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated Wells Capital Management Incorporated | |
Portfolio Manager | Aziz Hamzaogullari Aziz Hamzaogullari |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND INTO WELLS FARGO ADVANTAGE VT CORE EQUITY FUND
In addition to your Target Fund, shareholders in one or more other Target Funds are being asked to approve a Merger into your Acquiring Fund. Your Merger is not contingent upon approval of any other Merger by shareholders of any other Target Fund.
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA Fundamental Large Cap Fund: | You will get this class of shares of Wells Fargo Advantage VT Core Equity Fund1: | ||||
Class 1 | Class 1 | ||||
Class 2 | Class 2 |
1 | The Fund is a shell fund ("Shell Fund") being created to receive the assets of one or more Target Funds. |
If you own this class of shares of Wells Fargo Advantage VT Large Company Core Fund: | You will get this class of shares of Wells Fargo Advantage VT Core Equity Fund1: | ||||
Single Class | Class 2 |
1 | The Fund is a shell fund ("Shell Fund") being created to receive the assets of one or more Target Funds. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
Evergreen VA Fundamental Large Cap Fund and Wells Fargo Advantage VT Core Equity Fund. Although the investment goals of the Funds have different focal points, with Evergreen VA Fundamental Large Cap Fund seeking capital growth with the potential for current income, and the Wells Fargo Advantage VT Core Equity Fund seeking long-term capital appreciation, the principal investment strategies of the Funds are similar. Each Fund normally invests at least 80% of its assets in large-capitalization companies and may invest up to 20% in the securities of foreign issuers. One difference is that Evergreen VA Fundamental Large Cap Fund may invest up to 20% of its assets in below investment grade bonds and convertible preferred stocks of any quality, while investing in below investment grade bonds or in convertible preferred stocks are not part of the principal investment strategies of the Wells Fargo Advantage VT Core Equity Fund.
A more complete description of each Fund's investment goals and strategies is below.
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND (Target Fund) | WELLS FARGO ADVANTAGE VT CORE EQUITY FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks capital growth with the potential for current income. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund normally invests at least 80% of its assets in common stocks of large U.S. companies (i.e., companies whose market capitalizations fall within the market capitalization range of the companies tracked by the Russell 1000® Index, measured at the time of purchase). In addition, the Fund will seek to maintain a dollar-weighted average market capitalization within the market capitalization range of the companies tracked by the Russell 1000® Index. As of December 31, 2009, the Russell 1000® Index had a market capitalization range of approximately $263 million to $324 billion. The Fund earns current income from dividends paid on equity securities and may seek additional income primarily by investing up to 20% of its assets in convertible bonds, including below investment grade bonds, commonly referred to as "high yield" or "junk" bonds, and convertible preferred stocks of any quality. The Fund may also invest up to 20% of its assets in foreign securities. | Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of large capitalization companies, and up to 20% of its assets in equity securities of foreign issuers, including ADRs and similar investments. The Fund invests principally in equity securities of large capitalization companies, which it defines as securities of companies with market capitalizations within the range of the Russell 1000® Index. The market capitalization range of the Russell 1000® Index was $263 million to $324 billion, as of December 31, 2009, and is expected to change frequently. | ||||
The Fund may, but will not necessarily, use derivatives. | Furthermore, the Fund may use futures, options, or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund's stock selection is based on a diversified style of equity management that allows it to invest in both value- and growth-oriented equity securities. "Value" securities are securities which the Fund's portfolio managers believe are currently undervalued in the marketplace. "Growth" stocks are stocks of companies which the Fund's portfolio managers believe to have potential for steady to accelerated growth in earnings. The Fund's portfolio managers utilize an intrinsic value approach to look for companies that they believe are temporarily undervalued in the marketplace, sell at a discount to their asset values, or display certain characteristics such as a return premium to cost of capital or a sustainable competitive advantage in their industry. | The Fund invests for the long term, focusing on identifying differentiated companies with attractive secular growth potential, steady free cash flow production, and high returns on capital. The Fund's preference is for companies with sustainable competitive advantages and high barriers to entry, and it seeks strong management teams with a focus on shareholder value creation. Both growth and value opportunities are evaluated with an approach that uses the present value of estimated future cash flows as the core methodology for measuring intrinsic value. The Fund employs a disciplined fundamental research process which produces bottom-up company models using key assumptions that drive sales, margins, and asset intensity. Models are run with multiple scenarios designed to provide a meaningful range of outcomes and the ability to assess investors embedded expectations. The Fund seeks to purchase companies that meet the criteria above when the shares are selling at a significant discount to intrinsic value. | ||||
A Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | Sell decisions are similarly driven by the Fund's long term fundamental analysis. The Fund constantly reviews portfolio investments and may sell a holding when it has achieved its valuation target, if the Fund believes there is structural or permanent deterioration in the underlying fundamentals of the business, or if the Fund identifies what it believes is a more attractive investment opportunity with a better margin of safety. | ||||
A Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Wells Fargo Advantage VT Large Company Core Fund and Wells Fargo Advantage VT Core Equity Fund. Although the investment goals of the Funds have different focal points, with the Wells Fargo Advantage VT Large Company Core Fund seeking total return comprised of long-term capital appreciation and current income, and the Wells Fargo Advantage VT Core Equity Fund seeking long-term capital appreciation, the principal investment strategies of the Funds are similar. Each Fund normally invests at least 80% of its net assets in the equity securities of large-capitalization companies. An important difference is that the Wells Fargo Advantage VT Large Company Core Fund may invest up to 25% of its total assets in foreign securities through ADRs and similar investments, whereas the Wells Fargo Advantage VT Core Equity Fund may invest up to 20% of its assets directly in foreign securities. This means that the Wells Fargo Advantage VT Large Company Core Fund may be subject to foreign investment risk to a greater extent than the Wells Fargo Advantage VT Core Equity Fund. Another difference is that the Wells Fargo Advantage VT Large Company Core Fund invests in approximately 30 to 50 large capitalization companies, whereas this is not a part of the principal investment strategies for the Wells Fargo Advantage VT Core Equity Fund. This means that the Wells Fargo Advantage VT Large Company Core Fund may invest in a more limited number of issuers than the Wells Fargo Advantage VT Core Equity Fund, therefore, a decline in the market value of a particular security may affect the Wells Fargo Advantage VT Large Company Core Fund more than the Wells Fargo Advantage VT Core Equity Fund.
A more complete description of each Fund's investment goals and strategies is below.
WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND (Target Fund) | WELLS FARGO ADVANTAGE VT CORE EQUITY FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks total return comprised of long-term capital appreciation and current income. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of large-capitalization companies, and up to 25% of its total assets in equity securities of foreign issuers through ADRs and similar investments. The Fund invests principally in equity securities of approximately 30 to 50 large-capitalization companies, the majority of which pay dividends. The Fund defines large-capitalization companies as those with market capitalizations of $3 billion or more. | Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of large capitalization companies, and up to 20% of its assets in equity securities of foreign issuers, including ADRs and similar investments. The Fund invests principally in equity securities of large capitalization companies, which it defines as securities of companies with market capitalizations within the range of the Russell 1000® Index. The market capitalization range of the Russell 1000® Index was $263 million to $324 billion, as of December 31, 2009, and is expected to change frequently. | ||||
Furthermore, the Fund may use futures, options, or swap agreements, as well as other derivatives, to manage risk or to enhance return. | Furthermore, the Fund may use futures, options, or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund selects companies that it believes are financially strong and meet specific valuation criteria as compared to the overall market and the companies' own valuation histories. The Fund's discipline is predicated on establishing fundamental business valuations for strong businesses and then selectively investing in those qualifying companies whose stock prices are at least one-third lower than their business values. The Fund's process is initially quantitative, focusing on absolute criteria such as the growth in a company's earnings, as well as relative criteria such as where a stock is currently trading versus its historic trading levels based on such criteria as its price to earnings, its price to book value, dividend yield and its price to sales. The Fund's primary analytical effort is qualitative, where it assesses whether a company is undervalued or merely statistically cheap. The Fund focuses on the role of management and the potential for a positive catalyst. | The Fund invests for the long term, focusing on identifying differentiated companies with attractive secular growth potential, steady free cash flow production, and high returns on capital. The Fund's preference is for companies with sustainable competitive advantages and high barriers to entry, and it seeks strong management teams with a focus on shareholder value creation. Both growth and value opportunities are evaluated with an approach that uses the present value of estimated future cash flows as the core methodology for measuring intrinsic value. The Fund employs a disciplined fundamental research process which produces bottom-up company models using key assumptions that drive sales, margins, and asset intensity. Models are run with multiple scenarios designed to provide a meaningful range of outcomes and the ability to assess investors embedded expectations. The Fund seeks to purchase companies that meet the criteria above when the shares are selling at a significant discount to intrinsic value. | ||||
The Fund is a disciplined seller, basing its decisions on the relationship between a company's business value and its stock price. Typically, the Fund sells a stock when the stock price equals the updated business value. Stocks will also be sold if the Fund believes the business value and/or future prospects have materially eroded. The Fund may also sell a stock if it believes a comparable company offers a more compelling opportunity based on valuation and prospects. | Sell decisions are similarly driven by the Fund's long term fundamental analysis. The Fund constantly reviews portfolio investments and may sell a holding when it has achieved its valuation target, if the Fund believes there is structural or permanent deterioration in the underlying fundamentals of the business, or if the Fund identifies what it believes is a more attractive investment opportunity with a better margin of safety. | ||||
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. | The Fund may hold some of its assets in cash or money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Core Equity Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees.
Principal Risks
Counter-Party Risk
Derivatives Risk
Foreign Investment Risk
Growth Style Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Value Style Investment Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth for the Target Fund in the Fund's prospectus and SAI and, for the Acquiring Fund, in this prospectus/proxy statement and the Merger SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Target Fund's returns have varied from year to year and compare the Target Fund's returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar chart and table do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown. Since the Acquiring Fund is a Shell Fund, it has not yet commenced operations and therefore performance information for the Acquiring Fund is not yet available.
Year-by-Year Total Return for Class 2 Shares (%) for Evergreen VA Fundamental Large Cap Fund
Highest Quarter: | 2nd Quarter 2009 | +18.12% |
Lowest Quarter: | 4th Quarter 2008 | -21.65% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT Large Company Core Fund
Highest Quarter: | 2nd Quarter 2009 | +22.00% |
Lowest Quarter: | 4th Quarter 2008 | -25.85% |
Average Annual Total Returns for the periods ended 12/31/20091 | ||||||||||
Evergreen VA Fundamental Large Cap Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 1 | 3/1/1996 | 36.06% 36.06% | 3.98% 3.98% | 2.50% 2.50% | ||||||
Class 2 | 7/31/2002 | 35.75% 35.75% | 3.72% 3.72% | 2.31% 2.31% | ||||||
S&P 500 Index (reflects no deduction for fees, expenses, or taxes) | 26.46% 26.46% | 0.42% 0.42% | -0.95% -0.95% |
1 | Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class' 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, 10 year returns for Class 2 would have been lower. |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Large Company Core Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Single Class | 4/12/1994 | 37.01% 37.01% | -0.83% -0.83% | -4.00% -4.00% | ||||||
S&P 500 Index (reflects no deduction for fees, expenses, or taxes) | 26.46% 26.46% | 0.42% 0.42% | -0.95% -0.95% |
1 | The S&P 500® Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the Index proportionate to its market value. S&P 500® is a registered trademark of Standard and Poor's. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for the Target Fund set forth in the following table are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. If the Merger of Wells Fargo Advantage VT Large Company Core Fund with the Acquiring Fund was the only Merger proposed, the pro forma expenses shown would have been approximately the same. The pro forma expense table below labeled "Wells Fargo Advantage VT Core Equity Fund (Pro Forma Assuming Merger of Wells Fargo Advantage VT Large Company Core Fund Only with Acquiring Fund)" shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming only the Merger of Wells Fargo Advantage VT Large Company Core Fund with the Acquiring Fund had taken place at the beginning of that period. Exhibit C contains expense tables and examples for the Target Fund based upon the actual expenses incurred by the Target Fund during its most recently completed fiscal year. Exhibit C also includes a pro forma expense table and examples for the Acquiring Fund based on the date of the Target Funds' most recent financial statements. Since the Acquiring Fund has not yet commenced operations, the information presented is based on estimates.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Fundamental Large Cap Fund | ||||
Total Annual Fund Operating Expenses | ||||
Class 1 | 0.86% 0.86% | |||
Class 2 | 1.11% 1.11% |
Wells Fargo Advantage VT Large Company Core Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.90% 1.90% | 1.00% 1.00% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Core Equity Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 1 | 0.78% 0.78% | 0.75% 0.75% | ||||
Class 2 | 1.03% 1.03% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Core Equity Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 2 | 1.64% 1.64% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA Fundamental Large Cap Fund, the Wells Fargo Advantage VT Large Company Core Fund, and the Wells Fargo Advantage VT Core Equity Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of Evergreen VA Fundamental Large Cap Fund pursuant to the Fund's Distribution Plan are 0.25%. Class 1 shares of Evergreen VA Fundamental Large Cap Fund do not pay a 12b-1 fee. The fees charged to Class 2 shares of the Wells Fargo Advantage VT Core Equity Fund pursuant to the Fund's Distribution Plan are 0.25%. Class 1 shares of Wells Fargo Advantage VT Core Equity Fund do not pay a 12b-1 fee. The fees charged to the single class of shares of the Wells Fargo Advantage VT Large Company Core Fund pursuant to the Fund's Distribution Plan are 0.25%.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, Evergreen VA Fundamental Large Cap Fund's portfolio turnover rate was 35% of the average value of its portfolio and the Wells Fargo Advantage VT Large Company Core Fund's portfolio turnover rate was 18% of the average value of its portfolio. Since the Acquiring Fund has not yet commenced operations, its portfolio turnover rate is not yet available.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated Wells Capital Management Incorporated | |
Portfolio Managers | Walter McCormack Emory ("Sandy") Sanders, Jr. |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
EVERGREEN VA SPECIAL VALUES FUND INTO WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA Special Values Fund: | You will get this class of shares of Wells Fargo Advantage VT Small/Mid Cap Value Fund: | ||||
Class 1 | Class 11 | ||||
Class 2 | Class 22 |
1 | Class will be created to receive the assets of the corresponding share class set forth above. |
2 | Upon completion of the proposed Merger, the Fund will rename its existing class of shares as Class 2 shares. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
The Funds' investment goals and investment strategies are similar. Evergreen VA Special Values Fund seeks capital growth in the value of its shares, while the Wells Fargo Advantage VT Small/Mid Cap Value Fund seeks long-term capital appreciation. Each Fund normally invests at least 80% of its assets in small capitalization companies. One difference is that the Wells Fargo Advantage VT Small/Mid Cap Value Fund may invest up to 30% of its total assets in equity securities of foreign issuers, whereas investing in equity securities of foreign issuers is not part of the principal investment strategy of Evergreen VA Special Values Fund. This means that the Wells Fargo Advantage VT Small/Mid Cap Value Fund may invest in foreign securities to a greater extent than Evergreen VA Special Values Fund.
A more complete description of each Fund's investment goals and strategies is below
EVERGREEN VA SPECIAL VALUES FUND (Target Fund) | WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND (Acquiring Fund)1 | ||||
INVESTMENT GOAL | |||||
The Fund seeks capital growth in the value of its shares. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund normally invests at least 80% of its assets in common stocks of small U.S. companies (i.e., companies whose market capitalizations fall within the range tracked by the Russell 2000® Index, measured at the time of purchase.) The Fund will seek to maintain a dollar-weighted average market capitalization that falls within the market capitalization range of the companies tracked by the Russell 2000® Index. As of its last reconstitution in June 2009, the Russell 2000® Index had a market capitalization range of approximately $39 million to $2.3 billion. The remaining 20% of the Fund's assets may be represented by cash or invested in various cash equivalents or common stocks of any market capitalization. | Under normal circumstances the Fund invests at least 80% of its net assets in equity securities of small- capitalization companies, and up to 30% of its total assets in equity securities of foreign issuers, including ADRs and similar investments. The Fund invests principally in equity securities of small- capitalization companies, which are defined as companies with market capitalizations within the range of the Russell 2500® Index. The market capitalization range of the Russell 2500® Value Index was $39 million to $4.2 billion, as of June 30, 2009, and is expected to change frequently. | ||||
The Fund may, but will not necessarily, use derivatives. | Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The portfolio manager looks for significantly undervalued companies that he believes have the potential for above-average appreciation with below-average risk. Typical investments include stocks of companies that have low price-to-earnings ratios, are generally out of favor in the marketplace, are selling significantly below their stated or replacement book value or are undergoing a reorganization or other corporate action that may create above-average price appreciation. | The Fund employs a multi-faceted investment process that consists of quantitative idea generation and rigorous fundamental research. This process involves identifying companies that the Fund believes exhibit attractive valuation characteristics and warrant further research. The Fund then conducts fundamental research to find securities in small- and medium-capitalization companies with a positive dynamic for change that could move the price of such securities higher. The positive dynamic may include a change in management team, a new product or service, corporate restructuring, an improved business plan, a change in the regulatory environment, or the right time for the industry in its market cycle. The Fund believes the combination of buying the securities of undervalued small and medium capitalization companies with positive dynamics for change limits its downside risk while allowing the Fund to potentially participate in significant upside appreciation in the price of such securities. | ||||
The Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | The Fund typically sells a security when its fundamentals deteriorate, its relative valuation versus the peer group and market becomes expensive, or for risk management considerations. | ||||
The Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
1 | Reflects the principal investment strategies of the Fund to be effective as of 5/1/2010. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminolgy and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Small/Mid Cap Value Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees. For example, because the Wells Fargo Advantage VT Small/Mid Cap Value Fund may invest up to 30% of the Fund's total assets in equity securities of foreign issuers, whereas this is not part of the principal investment strategy of the Evergreen VA Special Values Fund, an investment in the Wells Fargo Advantage VT Small/Mid Cap Value Fund may be subject to foreign investment risk to a greater extent than an investment in Evergreen VA Special Values Fund.
Principal Risk
Counter-Party Risk
Derivatives Risk
Foreign Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Smaller Company Securities Risk
Value Style Investment Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth in the Fund's prospectus and SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Fund's returns have varied from year to year and compare the Fund's returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar charts and tables do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown.
Year-by-Year Total Return for Class 1 Shares (%) for Evergreen VA Special Values Fund
Highest Quarter: | 3rd Quarter 2009 | +23.22% |
Lowest Quarter: | 4th Quarter 2008 | -25.96% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT Small/Mid Cap Value Fund
Highest Quarter: | 3rd Quarter 2009 | +25.41% |
Lowest Quarter: | 4th Quarter 2008 | -31.25% |
Average Annual Total Returns for the periods ended 12/31/20091 | ||||||||||
Evergreen VA Special Values Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 1 | 5/1/1998 | 29.40% 29.40% | 2.05% 2.05% | 7.96% 7.96% | ||||||
Class 2 | 7/31/2002 | 29.06% 29.06% | 1.79% 1.79% | 7.76% 7.76% | ||||||
Russell 2000 Value Index (reflects no deduction for fees, expenses, or taxes) | 20.58% 20.58% | -0.01% -0.01% | 8.27% 8.27% |
1 | Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class' 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, 10 year returns for Class 2 would have been lower. |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Small/Mid Cap Value Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 11 | TBD | 60.18% 60.18% | 3.53% 3.53% | 5.18% 5.18% | ||||||
Single Class | 10/10/1997 | 60.18% 60.18% | 3.53% 3.53% | 5.18% 5.18% | ||||||
Russell 2500 Value Index (reflects no deduction for fees, expenses, or taxes) | 27.68% 27.68% | 0.84% 0.84% | 8.18% 8.18% |
1 | Performance shown for the Class 1 shares reflects the performance of the Single Class shares, and includes expenses that are not applicable to and higher than those of the Class 1 shares. The Single Class shares annual returns are substantially similar to what the Class 1 share returns would be because the Single Class and Class 1 shares are invested in the same portfolio and their returns differ only to the extent that they do not have similar expenses. |
2 | The Russell 2500 Value Index measures the performance of those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for both the Target and the Acquiring Funds set forth in the following tables are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. Exhibit C contains expense tables and examples for both the Target and Acquiring Funds based upon the actual expenses incurred by such Funds during their most recently completed fiscal years. Exhibit C also includes pro forma expense tables and examples for the Acquiring Fund based on the date of the Acquiring Fund's most recent financial statements.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Special Values Fund | ||||
Total Annual Fund Operating Expenses1,2 | ||||
Class 1 | 1.06% 1.06% | |||
Class 2 | 1.31% 1.31% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
2 | The Total Annual Fund Operating Expenses listed above do not reflect voluntary fee waivers and/or expense reimbursements made by the Fund's investment advisor in order to reduce expense ratios. Including voluntary fee waivers and/or expense reimbursements as of September 30, 2009, Total Annual Fund Operating Expenses were 1.01% for Class 1 and 1.26% for Class 2. The Fund's investment advisor may cease these voluntary waivers and/or reimbursements at any time. |
Wells Fargo Advantage VT Small/Mid Cap Value Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 2.34% 2.34% | 1.14% 1.14% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Small/Mid Cap Value Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1,2 | |||||
Class 1 | 1.00% 1.00% | 0.90% 0.90% | ||||
Class 2 | 1.25% 1.25% | 1.15% 1.15% |
1 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
2 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.89% for Class 1 and 1.14% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA Special Values Fund and the Wells Fargo Advantage VT Small/Mid Cap Value Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of each Fund under each Fund's Distribution Plan are the same, 0.25% of the Fund's average daily net assets. Class 1 shares of both Funds do not pay a 12b-1 fee.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, the Evergreen VA Special Value Fund's portfolio turnover rate was 44% of the average value of its portfolio and the Wells Fargo Advantage VT Small/Mid Cap Value Acquiring Fund's portfolio turnover rate was 45% of the average value of its portfolio.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated Wells Capital Management Incorporated | |
Portfolio Managers1 | I. Charles Rinaldi I. Charles Rinaldi |
1 | Reflects the portfolio management of the Fund as of May 1, 2010. |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
EVERGREEN VA GROWTH FUND INTO WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA Growth Fund: | You will get this class of shares of Wells Fargo Advantage VT Small Cap Growth Fund: | ||||
Class 1 | Class 11 | ||||
Class 2 | Class 22 |
1 | Class will be created to receive the assets of the corresponding share class set forth above. |
2 | Upon completion of the proposed Merger, the Fund will rename its existing single class of shares as Class 2 shares. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
The Funds' investment goals and investment strategies are similar. Evergreen VA Growth Fund seeks long-term capital growth, while the Wells Fargo Advantage VT Small Cap Growth Fund seeks long-term capital appreciation. Both Funds employ a growth style of investing. One difference is that Evergreen VA Growth Fund normally invests at least 75% of its assets in the common stocks of small and medium-capitalization U.S. companies, while the Wells Fargo Advantage VT Small Cap Growth Fund normally invests at least 80% of its assets in equity securities of small-capitalization companies. This means that the Wells Fargo Advantage VT Small Cap Growth Fund may invest in small capitalization companies to a greater extent than Evergreen VA Growth Fund.
A more complete description of each Fund's investment goals and strategies is below.
EVERGREEN VA GROWTH FUND (Target Fund) | WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks long-term capital growth. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund seeks to achieve its goal by normally investing at least 75% of its assets in common stocks of small- and medium-sized U.S. companies, whose market capitalizations fall within the market capitalization range of the companies tracked by the Russell 2000® Growth Index, measured at the time of purchase. As of its last reconstitution in June 2008, the Russell 2000® Growth Index had a market capitalization range of approximately $91 million to $3.8 billion. The remaining portion of the Fund's assets may be invested in companies of any size. The Fund will seek to maintain a dollar-weighted average market capitalization within the market capitalization range of the companies tracked by the Russell 2000® Growth Index. | Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of small-capitalization companies. The Fund invests principally in equity securities of small-capitalization companies that it believes have above-average growth potential. The Fund defines small-capitalization companies as those with market capitalizations at the time of purchase of less than $2 billion. | ||||
The Fund may, but will not necessarily, use derivatives. | Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund's portfolio managers employ a growth style of equity management and will generally seek to purchase stocks of companies that have demonstrated earnings growth potential which they believe is not yet reflected in the stock's market price. The Fund's portfolio managers consider potential earnings growth above the average earnings growth of companies included in the Russell 2000® Growth Index as a key factor in selecting investments. | The Fund focuses its investment strategy on identifying and investing in rapidly growing small capitalization companies that are in an early or transitional stage of their development, before their potential is discovered by the market. The Fund builds its portfolio by selecting companies that it considers to have successful business plans. The Fund seeks high growth, favorably valued securities and has a bias for growth companies with reasonable valuation. The Fund maintains a disciplined approach to monitoring the valuation characteristics of the portfolio. The Fund may actively trade portfolio securities. | ||||
The Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | The Fund uses a variety of criteria specific to a portfolio security to determine when the Fund may potentially sell such security to avoid reacting to pressure caused by volatility in the broad small cap market. Such criteria may include a security reaching the Fund's target price (potentially as a result of an expansion of the price-earnings multiple or a change in our earnings estimate), the availability of a more favorable investment opportunity, or a drop in the price of a security below cost (after adjustment for major market declines). | ||||
The Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Small Cap Growth Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees. For example, because Evergreen VA Growth Fund normally invests at least 75% of its assets in the common stocks of small and medium-capitalization U.S. companies, while the Wells Fargo Advantage VT Small Cap Growth Fund normally invests at least 80% of its net assets in equity securities of small-capitalization companies, an investment in Wells Fargo Advantage VT Small Cap Growth Fund may be subject to smaller company securities risk to a greater extent than an investment in Evergreen VA Growth Fund.
Principal Risk
Active Trading Risk
Counter-Party Risk
Derivatives Risk
Growth Style Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Smaller Company Securities Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth in the Fund's prospectus and SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Fund's returns have varied from year to year and compare the Fund's returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar charts and tables do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown.
Year-by-Year Total Return for Class 1 Shares (%) for Evergreen VA Growth Fund
Highest Quarter: | 4th Quarter 2001 | +25.84% |
Lowest Quarter: | 4th Quarter 2008 | -25.91% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT Small Cap Growth Fund
Highest Quarter: | 4th Quarter 2001 | +29.32% |
Lowest Quarter: | 1st Quarter 2001 | -31.31% |
Average Annual Total Returns for the periods ended 12/31/20091 | ||||||||||
Evergreen VA Growth Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 1 | 3/3/1998 | 39.78% 39.78% | 1.57% 1.57% | 2.83% 2.83% | ||||||
Class 2 | 7/31/2002 | 39.45% 39.45% | 1.30% 1.30% | 2.63% 2.63% | ||||||
Russell 2000 Growth Index (reflects no deduction for fees, expenses, or taxes) | 34.47% 34.47% | 0.87% 0.87% | -1.37% -1.37% |
1 | Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class' 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, 10 year returns for Class 2 would have been lower. |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Small Cap Growth Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 11 | TBD | 52.64% 52.64% | 5.82% 5.82% | -2.49% -2.49% | ||||||
Single Class | 5/1/1995 | 52.64% 52.64% | 5.82% 5.82% | -2.49% -2.49% | ||||||
Russell 2000 Growth Index (reflects no deduction for fees, expenses, or taxes) | 34.47% 34.47% | 0.87% 0.87% | -1.37% -1.37% |
1 | Performance shown for the Class 1 shares reflects the performance of the Single Class shares, and includes expenses that are not applicable to and higher than those of the Class 1 shares. The Single Class shares annual returns are substantially similar to what the Class 1 share returns would be because the Single Class and Class 1 shares are invested in the same portfolio and their returns differ only to the extent that they do not have similar expenses. |
2 | The Russell 2000® Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for both the Target and the Acquiring Funds set forth in the following tables are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. Exhibit C contains expense tables and examples for both the Target and Acquiring Funds based upon the actual expenses incurred by such Funds during their most recently completed fiscal years. Exhibit C also includes pro forma expense tables and examples for the Acquiring Fund based on the date of the Acquiring Fund's most recent financial statements.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Growth Fund | ||||
Total Annual Fund Operating Expenses1,2 | ||||
Class 1 | 1.04% 1.04% | |||
Class 2 | 1.29% 1.29% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
2 | The Total Annual Fund Operating Expenses listed above do not reflect voluntary fee waivers and/or expense reimbursements made by the Fund's investment advisor in order to reduce expense ratios. Including voluntary fee waivers and/or expense reimbursements as of September 30, 2009, Total Annual Fund Operating Expenses were 1.01% for Class 1 and 1.26% for Class 2. The Fund's investment advisor may cease these voluntary waivers and/or reimbursements at any time. |
Wells Fargo Advantage VT Small Cap Growth Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.27% 1.27% | 1.20% 1.20% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Small Cap Growth Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 1 | 0.96% 0.96% | 0.95% 0.95% | ||||
Class 2 | 1.21% 1.21% | 1.20% 1.20% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA Growth Fund and the Wells Fargo Advantage VT Small Cap Growth Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of each Fund under each Fund's Distribution Plan are the same, 0.25% of the Fund's average daily net assets. Class 1 shares of both Funds do not pay a 12b-1 fee.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, the Evergreen VA Growth Fund's portfolio turnover rate was 123% of the average value of its portfolio and the Wells Fargo Advantage VT Small Cap Growth Fund's portfolio turnover rate was 75% of the average value of its portfolio.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated Wells Capital Management Incorporated | |
Portfolio Managers | Jerome ("Cam") Philpott, CFA Stuart Roberts |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
EVERGREEN VA INTERNATIONAL EQUITY FUND INTO WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Evergreen VA International Equity Fund: | You will get this class of shares of Wells Fargo Advantage VT International Core Fund: | ||||
Class 1 | Class 11 | ||||
Class 2 | Class 22 |
1 | Class will be created to receive the assets of the corresponding share class set forth above. |
2 | Upon completion of the proposed Merger, the Fund will rename its existing single class of shares as Class 2 shares. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
The Funds' investment goals and investment strategies are similar. Evergreen VA International Equity Fund seeks long-term capital growth and secondarily, modest income, while the Wells Fargo Advantage VT International Core Fund seeks long-term capital appreciation. Each Fund invests normally at least 80% of its assets in the equity securities of foreign issuers. One difference is that Evergreen VA International Equity Fund seeks modest income from dividends while the Wells Fargo Advantage VT International Core Fund does not. This means that Evergreen VA International Equity Fund may focus more on investments that pay dividiends than the Wells Fargo Advantage VT International Core Fund.
A more complete description of each Fund's investment goals and strategies is below.
EVERGREEN VA INTERNATIONAL EQUITY FUND (Target Fund) | WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND (Acquiring Fund)1 | ||||
INVESTMENT GOAL | |||||
The Fund seeks long-term capital growth and secondarily, modest income. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
The Fund normally invests at least 80% of its assets in equity securities issued by, in the portfolio manager's opinion, established and quality non-U.S. companies located in countries with developed markets. The Fund normally invests at least 65% of its assets in the securities of companies in at least three countries (other than the United States). | Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of foreign issuers. | ||||
The Fund may also invest in emerging markets. | Under normal circumstances, we invest up to 20% of the Fund's total assets in emerging market equity securities. | ||||
The Fund may purchase securities across all market capitalizations. | We may purchase securities across all market capitalizations. | ||||
The portfolio manager seeks both growth and value opportunities. For growth investments, the portfolio manager seeks, among other things, good business models, good management and growth in cash flows. For value investments, the portfolio manager seeks, among other things, companies that are undervalued in the marketplace compared to their assets. The Fund normally intends to seek modest income from dividends paid by its equity holdings. Other than cash and cash equivalents, the Fund intends to invest substantially all of its assets in the securities of non-U.S. issuers. | The Fund uses bottom-up stock selection, based on in-depth fundamental research as the cornerstone of its investment process. During each stage of the process, the Fund also considers the influence on the investment theses of top-down factors such as macroeconomic forecasts, real economic growth prospects, fiscal and monetary policy, currency issues, and demographic and political risks. Sector and country weights are the residual of its stock-selection decisions. The Fund's investment process seeks both growth and value opportunities. For growth investments, the Fund targets companies that it believes have strong business franchises, experienced and proven management, and accelerating cash flow growth rates. For value investments, the Fund targets companies that it believes are undervalued in the marketplace compared to their intrinsic value. Additionally, the Fund seeks to identify catalysts that will unlock value, which will then be recognized by the market. | ||||
The Fund may, but will not necessarily, use derivatives. | The Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund will consider selling a portfolio investment when a portfolio manager believes the issuer's investment fundamentals are beginning to deteriorate, when the investment no longer appears consistent with the portfolio manager's investment methodology, when the Fund must meet redemptions, in order to take advantage of more attractive investment opportunities, or for other investment reasons which a portfolio manager deems appropriate. | The Fund conducts ongoing review, research, and analysis of its portfolio holdings. The Fund may sell a stock if it achieves the Fund's investment objective for the position, if a stock's fundamentals or price change significantly, if the Fund changes its view of a country or sector, or if the stock no longer fits within the risk characteristics of the portfolio. | ||||
A Fund may, but will not necessarily, temporarily invest up to 100% of its assets in cash and/or high-quality money market instruments in response to adverse economic, political or market conditions. This strategy is inconsistent with the Fund's investment goal and principal investment strategies and, if employed, could result in a lower return and loss of market opportunity. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
1 | Reflects the principal investment strategies of the Funds to be effective at the time of the Merger. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT International Core Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees.
Principal Risk
Active Trading Risk
Counter-Party Risk
Currency Hedging Risk
Derivatives Risk
Emerging Markets Risk
Foreign Investment Risk
Growth Style Investment Risk
Issuer Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Smaller Company Securities Risk
Value Style Investment Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth in the Fund's prospectus and SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Fund's returns have varied from year to year and compare the Fund's returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for an Evergreen fund at evergreeninvestments.com and for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar charts and tables do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown.
Year-by-Year Total Return for Class 1 Shares (%) for Evergreen VA International Equity Fund
Highest Quarter: | 3rd Quarter 2009 | +18.08% |
Lowest Quarter: | 3rd Quarter 2008 | -20.63% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT International Core Fund
Highest Quarter: | 3rd Quarter 2009 | +17.83% |
Lowest Quarter: | 3rd Quarter 2008 | -21.41% |
Average Annual Total Returns for the periods ended 12/31/20091 | ||||||||||
Evergreen VA International Equity Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Class 1 | 8/17/1998 | 15.95% 15.95% | 2.19% 2.19% | 1.96% 1.96% | ||||||
Class 2 | 7/31/2002 | 15.47% 15.47% | 1.92% 1.92% | 1.76% 1.76% | ||||||
MSCI EAFE Free Index (Net) (reflects no deduction for fees, expenses, or taxes) | 31.78% 31.78% | 3.54% 3.54% | 1.17% 1.17% |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT International Core Fund | Inception Date of Share Class | 1 Year | 5 Year | Performance Since 7/3/2000 | ||||||
Class 11 | TBD | 12.66% 12.66% | -0.99% -0.99% | -2.38% -2.38% | ||||||
Single Class | 7/3/2000 | 12.66% 12.66% | -0.99% -0.99% | -2.38% -2.38% | ||||||
MSCI EAFE Index (Net) (reflects no deduction for fees, expenses, or taxes) | 31.78% 31.78% | 3.54% 3.54% | 1.58% 1.58% |
1 | Performance shown for the Class 1 shares reflects the performance of the Single Class shares, and includes expenses that are not applicable to and higher than those of the Class 1 shares. The Single Class shares annual returns are substantially similar to what the Class 1 share returns would be because the Single Class and Class 1 shares are invested in the same portfolio and their returns differ only to the extent that they do not have similar expenses. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for both the Target and the Acquiring Funds set forth in the following tables are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. Exhibit C contains expense tables and examples for both the Target and Acquiring Funds based upon the actual expenses incurred by such Funds during their most recently completed fiscal years. Exhibit C also includes pro forma expense tables and examples for the Acquiring Fund based on the date of the Acquiring Fund's most recent financial statements.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA International Equity Fund | ||||
Total Annual Fund Operating Expenses1 | ||||
Class 1 | 0.70% 0.70% | |||
Class 2 | 0.95% 0.95% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
Wells Fargo Advantage VT International Core Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.88% 1.88% | 1.00% 1.00% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT International Core Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1,2 | |||||
Class 1 | 1.00% 1.00% | 0.70% 0.70% | ||||
Class 2 | 1.25% 1.25% | 0.95% 0.95% |
1 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
2 | Funds Management has committed for three years after the closing of the merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.69% for Class 1 and 0.94% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Evergreen VA International Equity Fund and the Wells Fargo Advantage VT International Core Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to Class 2 shares of each Fund under each Fund's Distribution Plan are the same, 0.25% of the Fund's average daily net assets. Class 1 shares of both Funds do not pay a 12b-1 fee.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, the Evergreen VA International Equity Fund's portfolio turnover rate was 205% of the average value of its portfolio and the Wells Fargo Advantage VT International Core Fund's portfolio turnover rate was 230% of the average value of its portfolio.
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Wells Capital Management Incorporated1 Wells Capital Management Incorporated | |
Portfolio Manager | Francis Claró Francis Claró |
1 | While the sub-adviser of Wells Fargo Advantage International Core Fund is currently EIMC, it is anticipated that the sub-adviser will be changed to Wells Capital in advance of or at the Closing of the Merger. The portfolio manager of Wells Fargo Advantage International Core Fund will remain the same. |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND AND WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND INTO WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND
In addition to your Target Fund, shareholders in one or more other Target Funds are being asked to approve a Merger into your Acquiring Fund. Your Merger is not contingent upon approval of any other Merger by shareholders of any other Target Fund.
Share Class Information
The following table illustrates the share class of the Acquiring Fund that shareholders will receive as a result of the Merger in exchange for their shares in the Target Fund.
If you own this class of shares of Wells Fargo Advantage VT Equity Income Fund or Wells Fargo Advantage VT C&B Large Cap Value Fund: | You will get this class of shares of Wells Fargo Advantage VT Intrinsic Value Fund1: | ||||
Single Class | Class 22 |
1 | The Fund is a shell fund ("Shell Fund") being created to receive the assets of one or more Target Funds. |
2 | Upon completion of the proposed Merger, the Fund will rename its existing single class of shares as Class 2 shares. |
The Acquiring Fund shares that shareholders receive as a result of the Merger will have the same total value as the total value of their Target Fund shares as of the close of business on the business day immediately prior to the Merger.
The procedures for buying, selling and exchanging shares of the Funds are similar. For additional information, see the section entitled "Buying, Selling and Exchanging Fund Shares." This section also contains important information for foreign shareholders of an Evergreen Target Fund, defined as shareholders whose accounts do not currently have both a U.S. address and taxpayer identification number on record with the Funds. Following the Merger, foreign shareholders will no longer be able to make additional investments into a Wells Fargo Advantage Fund.
Investment Goal and Strategy Comparison
The following section compares the investment goals, principal investment strategies and fundamental investment policies of the Funds. The investment goals of the Funds may be changed without shareholder approval.
The investment goals and strategies of the Funds are similar. The Wells Fargo Advantage VT Equity Income Fund seeks long-term capital appreciation and dividend income, while the Wells Fargo Advantage VT Intrinsic Value Fund seeks long-term capital appreciation. In addition, while the Wells Fargo Advantage VT Equity Income Fund normally invests at least 80% of its assets in income-producing equity securities of large-capitalization companies, the Wells Fargo Advantage VT Intrinsic Value Fund invests normally at least 80% of its assets in equity securities of large-capitalization companies. An important difference is that the Wells Fargo Advantage VT Intrinsic Value Fund has a policy that allows it to invest up to 20% of its assets in equity securities of foreign issuers, whereas this is not a part of the principal investment strategies of the Wells Fargo Advantage VT Equity Income Fund. This distinction means that the Wells Fargo Advantage VT Intrinsic Value Fund may invest a greater percentage of its assets in foreign securities than the Wells Fargo Advantage VT Equity Income Fund. Another differencein that the Wells Fargo Advantage VT Intrinsic Value Fund intends to invest in only between 30 and 50 companies, while the Wells Fargo Advantage VT Equity Income Fund has no similar strategy. This means that the Wells Fargo Advantage VT Intrinsic Value Fund may be invested in fewer companies than the Wells Fargo Advantage VT Equity Income Fund.
A more complete description of each Fund's investment goals and strategies is below.
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND (Target Fund) | WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks long-term capital appreciation and dividend income. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
Under normal circumstances, the Fund invests at least 80% of its net assets in income-producing equity securities of large-capitalization companies. The Fund invests principally in equity securities of large-capitalization companies, which it defines as companies with market capitalizations of $3 billion or more. | Under normal circumstances, the Fund invests at least 80% of its total assets in equity securities of large-capitalization companies, and up to 20% of its total assets in equity securities of foreign issuers, through ADRs and similar investments. The Fund invests principally in equity securities of approximately 30 to 50 large-capitalization companies, which are defined as companies with market capitalizations within the range of the Russell 1000 Value® Index. The market capitalization range of the Russell 1000 Value® Index was $263 million to $324 billion, as of December 31, 2009, and is expected to change frequently. | ||||
Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | Furthermore, the Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund focuses on identifying companies that it believes have exceptional valuations, above market earnings growth, as well as consistency of dividend income and growth of the dividend. The Fund's screening process to identify such premier companies involves a search by market capitalization, dividend income or potential for dividend income, and stability of earnings to refine the selection universe. Additionally, the Fund screens for valuation by utilizing a comparative valuation tool that ranks a company's stock against a universe of other companies. This process helps to identify undervalued stocks and allows the Fund to focus its fundamental research on stocks that appear to offer exceptional investment opportunities. The Fund's fundamental research includes in-depth financial statement analysis that includes looking at a company's operating characteristics such as earnings and cash flow prospects, profit margin trends, and consistency of revenue growth. Other standard valuation measures are applied to this select group of stocks, such as price to earnings, price to book, price to sales and price to cash flow ratios, both on an absolute and on a relative basis. The Fund believes that its focus on valuation, capitalization size, consistency, and dividend yield all combine to produce a diversified portfolio of high quality stocks. | The Fund utilizes a long-term focus that is intended to take advantage of investment opportunities presented by what it believes are short-term price anomalies in high-quality stocks. The Fund seeks to identify companies with established operating histories, financial strength and management expertise, among other factors. The Fund seeks stocks that are trading at a discount to what it believes are their intrinsic values. Fundamental research is performed to identify securities for the portfolio with one or more catalysts present that the Fund believes will unlock the intrinsic value of the securities. These catalysts may include productive use of strong free cash flow, productivity gains, positive change in management or control, innovative or competitively superior products, increasing shareholder focus, or resolution of ancillary problems or misperceptions. The Fund may invest in any sector, and at times it may emphasize one or more particular sectors. | ||||
Because few companies meet the Fund's select screening criteria, it generally follows a low turnover approach and typically will only sell a stock if it no longer fits the Fund's criteria for a premier company. | The Fund may sell a holding if the value potential is realized, if warning signs emerge of beginning fundamental deterioration or if the valuation is no longer compelling relative to other investment opportunities. | ||||
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when we believe it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the investment goals of the Funds have different focal points, with the Wells Fargo Advantage VT C&B Large Cap Value Fund seeking long-term total return, consistent with minimizing risk to principal and the Wells Fargo Advantage VT Intrinsic Value Fund seeking long-term capital appreciation, the Fund's investment strategies are similar. The Wells Fargo Advantage VT C&B Large Cap Value Fund normally invests at least 80% of its assets in equity securities of large-capitalization companies and the Wells Fargo Advantage VT Intrinsic Value Fund normally invests at least 80% of its assets in equity securities of large-capitalization companies. An important difference is that the Wells Fargo Advantage VT Intrinsic Value Fund has a policy that allows it to invest up to 20% of its assets in equity securities of foreign issuers, whereas this is not a part of the principal investment strategies of the Wells Fargo Advantage VT C&B Large Cap Value Fund. This distinction means that the Wells Fargo Advantage VT Intrinsic Value Fund may invest a greater percentage of its assets in foreign securities than the Wells Fargo Advantage VT C&B Large Cap Value Fund.
A more complete description of each Fund's investment goals and strategies is below.
WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND (Target Fund) | WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND (Acquiring Fund) | ||||
INVESTMENT GOAL | |||||
The Fund seeks maximum long-term total return (current income and capital appreciation), consistent with minimizing risk to principal. | The Fund seeks long-term capital appreciation. | ||||
PRINCIPAL INVESTMENT STRATEGIES | |||||
Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of large-capitalization companies. The Fund invests principally in equity securities of large-capitalization companies, which it defines as companies with market capitalizations of $3 billion or more. The Fund manages a relatively focused portfolio of 30 to 50 companies that enables it to provide adequate diversification while allowing the composition and performance of the portfolio to behave differently than the market. | Under normal circumstances, the Fund invests at least 80% of its total assets in equity securities of large-capitalization companies, and up to 20% of its total assets in equity securities of foreign issuers, through ADRs and similar investments. The Fund invest principally in equity securities of approximately 30 to 50 large-capitalization companies, which it defines as companies with market capitalizations within the range of the Russell 1000 Value® Index. The market capitalization range of the Russell 1000 Value® Index was $263 million to $324 billion, as of December 31, 2009, and is expected to change frequently. | ||||
The Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | The Fund may use futures, options or swap agreements, as well as other derivatives, to manage risk or to enhance return. | ||||
The Fund selects securities for the portfolio based on an analysis of a company's financial characteristics and an assessment of the quality of a company's management. In selecting a company, the Fund considers criteria such as return on equity, balance sheet strength, industry leadership position and cash flow projections. The Fund further narrows the universe of acceptable investments by undertaking intensive research including interviews with a company's top management, customers and suppliers. The Fund believes its assessment of business quality and emphasis on valuation will protect the portfolio's assets in down markets, while its insistence on strength in leadership, financial condition and cash flow position will produce competitive results in all but the most speculative markets. | The Fund utilizes a long-term focus that is intended to take advantage of investment opportunities presented by what it believes are short-term price anomalies in high-quality stocks. The Fund seeks to identify companies with established operating histories, financial strength and management expertise, among other factors. The Fund seeks stocks that are trading at a discount to what it believes are their intrinsic values. Fundamental research is performed to identify securities for the portfolio with one or more catalysts present that the Fund believes will unlock the intrinsic value of the securities. These catalysts may include productive use of strong free cash flow, productivity gains, positive change in management or control, innovative or competitively superior products, increasing shareholder focus, or resolution of ancillary problems or misperceptions. The Fund may invest in any sector, and at times it may emphasize one or more particular sectors. | ||||
The Fund regularly reviews the investments of the portfolio and may sell a portfolio holding when it has achieved its valuation target, there is deterioration in the underlying fundamentals of the business, or the Fund has identified a more attractive investment opportunity. | The Fund may sell a holding if the value potential is realized, if warning signs emerge of beginning fundamental deterioration or if the valuation is no longer compelling relative to other investment opportunities. | ||||
The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. | The Fund may hold some of its assets in cash or in money market instruments, including U.S. Government obligations, shares of other mutual funds and repurchase agreements, or make other short-term investments to either maintain liquidity or for short-term defensive purposes when the Fund believes it is in the best interests of the shareholders to do so. During these periods, the Fund may not achieve its objective. |
Although the Funds have historically used different terminology and descriptions to describe their fundamental policies, the fundamental investment policies of the Target and Acquiring Funds are substantively similar. For a comparative chart of fundamental invesment policies, please see Exhibit B.
Principal Risk Comparison
Because the Evergreen funds and the Wells Fargo Advantage Funds were unaffiliated fund families until recently, the Funds have historically used different terminology and descriptions to describe their principal risks. Nonetheless, due to the similarity of the Funds' investment strategies, the Funds are generally subject to similar types of risks. Listed below are the principal risks that apply to an investment in the Wells Fargo Advantage VT Intrinsic Value Fund. A description of those risks can be found in the section of this prospectus/proxy statement entitled "Risk Descriptions." Although each of the Funds may be subject to all or substantially all of the risks listed below, they may be subject to a particular risk to different degrees. For example, because the Wells Fargo Advantage VT Equity Income Fund and the Wells Fargo Advantage VT C&B Large Cap Value Fund do not invest in foreign securities as part of their principal investment strategies, an investment in the Wells Fargo Advantage VT Intrinsic Value Fund may be subject to foreign investment risk to a greater extent than an investment in the Wells Fargo Advantage VT Equity Income Fund or in the Wells Fargo Advantage VT C&B Large Cap Value Fund.
Principal Risks
Counter-party Risk
Derivatives Risk
Foreign Investment Risk
Issuer Risk
Issuer Concentration Risk
Leverage Risk
Liquidity Risk
Management Risk
Market Risk
Regulatory Risk
Value Style Investment Risk
A discussion of the principal risks associated with an investment in the Target Fund may be found in the Target Fund's prospectus. In addition, each Fund has other investment policies, practices and restrictions which, together with the Fund's related risks, are also set forth for the Target Fund in the Fund's prospectus and SAI and, for the Acquiring Fund, in this prospectus/proxy statement and the Merger SAI.
Fund Performance Comparison
The following bar charts and tables illustrate how the Target Funds' returns have varied from year to year and compare the Target Funds' returns with those of one or more broad-based securities indexes. Past performance (before and after taxes) is not necessarily an indication of future results. Current month-end performance information is available for a Wells Fargo Advantage Fund at www.wellsfargo.com/advantagefunds. The bar charts and tables do not reflect contract, policy, separate account or other charges assessed by participating insurance companies; if they did, returns would be lower than those shown. Since the Acquiring Fund is a Shell Fund, it has not yet commenced operations and therefore performance information for the Acquiring Fund is not yet available.
Year-by-Year Total Return (%) for Wells Fargo Advantage VT C&B Large Cap Value Fund
Highest Quarter: | 3rd Quarter 2009 | +18.83% |
Lowest Quarter: | 4th Quarter 2008 | -23.41% |
Year-by-Year Total Return (%) for Wells Fargo Advantage VT Equity Income Fund
Highest Quarter: | 2nd Quarter 2003 | +16.47% |
Lowest Quarter: | 3rd Quarter 2002 | -20.59% |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT C&B Large Cap Value Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Single Class | 5/1/1998 | 28.90% 28.90% | 0.83% 0.83% | 0.90% 0.90% | ||||||
Russell 1000 Value Index (reflects no deduction for fees, expenses, or taxes) | 19.69% 19.69% | -0.25% -0.25% | 2.47% 2.47% |
1 | The Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in an index. |
Average Annual Total Returns for the periods ended 12/31/2009 | ||||||||||
Wells Fargo Advantage VT Equity Income Fund | Inception Date of Share Class | 1 Year | 5 Year | 10 Year | ||||||
Single Class | 5/6/1996 | 16.86% 16.86% | -0.95% -0.95% | 0.44% 0.44% | ||||||
Russell 1000 Value Index (reflects no deduction for fees, expenses, or taxes) | 19.69% 19.69% | -0.25% -0.25% | 2.47% 2.47% |
1 | The Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. You cannot invest directly in an index. |
Shareholder Fee and Fund Expense Comparison
The expenses for each class of shares of your Target Fund may be different from those of the corresponding class of shares of the Acquiring Fund.
With respect to both the Target and Acquiring Funds, no sales charges are imposed on either purchases or sales of fund shares.
The following tables entitled "Annual Fund Operating Expenses" allow you to compare the annual operating expenses of the Funds. The total annual fund operating expenses (before and after waiver) for the Target Fund set forth in the following table are based on the actual expenses for the twelve-month period ended September 30, 2009. The pro forma expense table shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming the Merger had taken place at the beginning of that period. If the Merger of Wells Fargo Advantage VT C&B Large Cap Value Fund with the Acquiring Fund was the only Merger proposed, the pro forma expenses shown would have been approximately the same. The pro forma expense table below labeled "Wells Fargo Advantage VT Intrinsic Value Fund (Pro Forma Assuming Merger of Wells Fargo Advantage VT C&B Large Cap Value Fund Only with Acquiring Fund)" shows you what the total annual fund operating expenses (before and after waiver) would have been for the Acquiring Fund for the twelve-month period ended September 30, 2009, assuming only the Merger of Wells Fargo Advantage VT C&B Large Cap Value Fund with the Acquiring Fund had taken place at the beginning of that period. Exhibit C contains expense tables and examples for the Target Fund based upon the actual expenses incurred by the Target Fund during its most recently completed fiscal year. Exhibit C also includes a pro forma expense table and examples for the Acquiring Fund based on the date of the Target Funds' most recent financial statements. Since the Acquiring Fund has not yet commenced operations, the information presented is based on estimates.
THE TABLES BELOW DO NOT REFLECT THE CHARGES AND FEES ASSESSED BY THE PARTICIPATING INSURANCE COMPANY UNDER YOUR CONTRACT OR POLICY. IF THESE CHARGES WERE REFLECTED, THE EXPENSES SHOWN BELOW WOULD BE HIGHER. PLEASE REFER TO THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT OR VARIABLE LIFE INSURANCE POLICY FOR INFORMATION REGARDING SUCH CHARGES.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT C&B Large Cap Value Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.57% 1.57% | 1.00% 1.00% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Equity Income Fund | ||||||
Total Annual Fund Operating Expenses (Before Waiver)1 | Total Annual Fund Operating Expenses (After Waiver)2 | |||||
Single Class | 1.21% 1.21% | 1.00% 1.00% |
1 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
2 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Intrinsic Value Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 2 | 1.10% 1.10% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Intrinsic Value Fund (Pro Forma) | ||||||
Total Annual Fund Operating Expenses (Before Waiver) | Total Annual Fund Operating Expenses (After Waiver)1 | |||||
Class 2 | 1.40% 1.40% | 1.00% 1.00% |
1 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
The Wells Fargo Advantage VT C&B Large Cap Value Fund and the Wells Fargo Advantage VT Equity Income Fund have each adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"). The fees charged to shares of each Fund under each Fund's Distribution Plan are the same, 0.25% of the Fund's average daily net assets.
Portfolio Turnover. The Target and Acquiring Funds pay transaction costs, such as commissions or dealer mark-ups, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in the annual fund operating expenses or in the example, affect each Fund's performance. During the most recent fiscal year, the Wells Fargo Advantage VT C&B Large Cap Value Fund's portfolio turnover rate was 15% of the average value of its portfolio and the Wells Fargo Advantage VT Equity Income Fund's portfolio turnover rate was 16% of the average value of its portfolio. Since the Acquiring Fund has not yet commenced operations, its portfolio turnover rate is not yet available.
The procedures for buying, selling and exchanging shares of the Funds are similar. For more information, see the section entitled "Merger Information."
Fund Management Information
The following table identifies the investment adviser, investment sub-adviser and portfolio manager(s) for the Acquiring Fund. Further information about the management of the Acquiring Fund can be found under the section entitled "Management of the Funds."
Acquiring Fund | ||
Investment Adviser | Funds Management Funds Management | |
Investment Sub-adviser | Metropolitan West Capital Management, Inc. Metropolitan West Capital Management, Inc. | |
Portfolio Managers | Howard Gleicher, CFA Gary Lisenbee David Graham Jeffrey Peck |
Tax Information
It is expected that the Merger will be tax-free to shareholders for U.S. federal income tax purposes, and receipt of an opinion substantially to that effect from Proskauer Rose LLP, special tax counsel to the Acquiring Fund, is a condition to the obligation of the Funds to consummate the Merger. This means that neither shareholders nor your Target or Acquiring Fund will recognize a gain or loss directly as a result of the Merger.
Certain other U.S. federal income tax consequences are discussed below under "Material U.S. Federal Income Tax Consequences of the Mergers."
RISK DESCRIPTIONS
An investment in each Fund is subject to certain risks. There is no assurance that investment performance of a Fund will be positive or that the Fund will meet its investment goal. An investment in a mutual fund is not a deposit with a bank; is not insured, endorsed or guaranteed by the FDIC or any government agency; and is subject to investment risks, including possible loss of your original investment. Like most investments, your investment in a Fund could fluctuate significantly in value over time and could result in a loss of money. The following provides additional information regarding the various risks referenced in the section entitled "Merger Summary."
Active Trading Risk. Frequent trading will result in a higher-than-average portfolio turnover ratio and increased trading expenses, and may generate higher short-term capital gains.
Counter-Party Risk. When a Fund enters into a repurchase agreement, an agreement where it buys a security from a seller that agrees to repurchase the security at an agreed upon price and time, the Fund is exposed to the risk that the other party will not fulfill its contractual obligation. Similarly, the Fund is exposed to the same risk if it engages in a reverse repurchase agreement where a broker-dealer agrees to buy securities and the Fund agrees to repurchase them at a later date.
Currency Hedging Risk. An investment transacted in a foreign currency may lose value due to fluctuations in the rate of exchange. To manage currency exposure, a Fund may purchase currency futures or enter into forward currency contracts to "lock in" the U.S. dollar price of the security. A forward currency contract involves an agreement to purchase or sell a specified currency at a specified future price set at the time of the contract. Similar to a forward currency contract, currency futures contracts are standardized for the convenience of market participants and quoted on an exchange. To reduce the risk of one party to the contract defaulting, the accrued profit or loss from a futures contract is calculated and paid on a daily basis rather than on the maturity of the contract.
Debt Securities Risk. Debt securities, such as notes and bonds, are subject to credit risk and interest rate risk. Credit risk is the possibility that an issuer of an instrument will be unable to make interest payments or repay principal when due. Changes in the financial strength of an issuer or changes in the credit rating of a security may affect its value. Interest rate risk is the risk that market interest rates may increase, which tends to reduce the resale value of certain debt securities, including U.S. Government obligations. Debt securities with longer durations are generally more sensitive to interest rate changes than those with shorter durations. Changes in market interest rates do not affect the rate payable on an existing debt security, unless the instrument has adjustable or variable rate features, which can reduce its exposure to interest rate risk. Changes in market interest rates may also extend or shorten the duration of certain types of instruments, such as asset-backed securities, thereby affecting their value and returns. Debt securities may also have, or become subject to, liquidity constraints.
Derivatives Risk. The term "derivatives" covers a broad range of investments, including futures, options and swap agreements. In general, a derivative refers to any financial instrument whose value is derived, at least in part, from the price of another security or a specified index, asset or rate. For example, a swap agreement is a commitment to make or receive payments based on agreed upon terms, and whose value and payments are derived by changes in the value of an underlying financial instrument. The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. These risks are heightened when the portfolio manager uses derivatives to enhance a Fund's return or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the Fund. The success of management's derivatives strategies will depend on its ability to assess and predict the impact of market or economic developments on the underlying asset, index or rate and the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. Certain derivative positions may be difficult to close out when a Fund's portfolio manager may believe it would be appropriate to do so. Certain derivative positions, e.g., over-the-counter swaps, are subject to counterparty risk.
Emerging Markets Risk. Emerging markets securities typically present even greater exposure to the risks described under "Foreign Investment Risk" and may be particularly sensitive to certain economic changes. For example, emerging market countries are more often dependent on international trade and are therefore often vulnerable to recessions in other countries. Emerging markets may be under-capitalized and have less developed legal and financial systems than markets in the developed world. Additionally, emerging markets may have volatile currencies and may be more sensitive than more mature markets to a variety of economic factors. Emerging market securities also may be less liquid than securities of more developed countries and could be difficult to sell, particularly during a market downturn.
Foreign Investment Risk. Foreign investments, including American Depositary Receipts (ADRs) and similar investments, are subject to more risks than U.S. domestic investments. These additional risks may potentially include lower liquidity, greater price volatility and risks related to adverse political, regulatory, market or economic developments. Foreign companies also may be subject to significantly higher levels of taxation than U.S. companies, including potentially confiscatory levels of taxation, thereby reducing the earnings potential of such foreign companies. In addition, amounts realized on sales or distributions of foreign securities may be subject to high and potentially confiscatory levels of foreign taxation and withholding when compared to comparable transactions in U.S. securities. Investments in foreign securities involve exposure to fluctuations in foreign currency exchange rates. Such fluctuations may reduce the value of the investment. Foreign investments are also subject to risks including potentially higher withholding and other taxes, trade settlement, custodial, and other operational risks and less stringent investor protection and disclosure standards in certain foreign markets. In addition, foreign markets can and often do perform differently from U.S. markets.
Growth Style Investment Risk. Growth stocks can perform differently from the market as a whole and from other types of stocks. Growth stocks may be designated as such and purchased based on the premise that the market will eventually reward a given company's long-term earnings growth with a higher stock price when that company's earnings grow faster than both inflation and the economy in general. Thus a growth style investment strategy attempts to identify companies whose earnings may grow or are growing at a rate faster than inflation and the economy. While growth stocks may react differently to issuer, political, market and economic developments than the market as a whole and other types of stocks by rising in price in certain environments, growth stocks also tend to be sensitive to changes in the earnings of their underlying companies and more volatile than other types of stocks, particularly over the short term. Furthermore, growth stocks may be more expensive relative to their current earnings or assets compared to the values of other stocks, and if earnings growth expectations moderate, their valuations may return to more typical norms, causing their stock prices to fall. Finally, during periods of adverse economic and market conditions, the stock prices of growth stocks may fall despite favorable earnings trends.
Issuer Risk. The value of a security may decline for a number of reasons that directly relate to the issuer or an entity providing credit support or liquidity support, such as management performance, financial leverage, and reduced demand for the issuer's goods, services or securities.
Issuer Concentration Risk. Since the Fund tends to invest in a smaller number of stocks than do many other similar mutual funds, changes in the value of individual stocks held by the Fund may have a larger impact on the Fund's net asset value than if the Fund were more broadly invested.
Leverage Risk. Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create a leveraging risk. The use of leverage may cause a Fund to liquidate portfolio positions when it may not be advantageous to do so. Leveraging, including borrowing, may cause a Fund to be more volatile than if the Fund had not been leveraged. This is because leverage tends to increase a Fund's exposure to market risk, interest rate risk or other risks by, in effect, increasing assets available for investment.
Liquidity Risk. A security may not be sold at the time desired or without adversely affecting the price.
Management Risk. We cannot guarantee that a Fund will meet its investment objective. We do not guarantee the performance of a Fund, nor can we assure you that the market value of your investment will not decline. We will not "make good" on any investment loss you may suffer, nor does anyone we contract with to provide services, such as selling agents or investment advisers, promise to make good on any such losses.
Market Risk. The market price of securities owned by a Fund may go up or down, sometimes rapidly or unpredictably. Securities may decline in value or become illiquid due to factors affecting securities markets generally or particular industries represented in the securities markets. The value or liquidity of a security may decline or become illiquid due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline or become illiquid due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. During a general downturn in the securities markets, multiple asset classes may decline or become illiquid in value simultaneously. Equity securities generally have greater price volatility than debt securities.
Mortgage- and Asset-Backed Securities Risk. Mortgage- and asset-backed securities represent interests in "pools" of mortgages or other assets, including consumer loans or receivables held in trust. In addition, mortgage dollar rolls are transactions in which a Fund sells mortgage-backed securities to a dealer and simultaneously agrees to purchase similar securities in the future at a predetermined price. Mortgage- and asset-backed securities, including mortgage dollar roll transactions, are subject to certain additional risks. Rising interest rates tend to extend the duration of these securities, making them more sensitive to changes in interest rates. As a result, in a period of rising interest rates, these securities may exhibit additional volatility. This is known as extension risk. In addition, these securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their debts sooner than expected. This can reduce the returns of a Fund because the Fund will have to reinvest that money at the lower prevailing interest rates. This is known as contraction risk. These securities also are subject to risk of default on the underlying mortgage or assets, particularly during periods of economic downturn.
Regulatory Risk. Changes in government regulations may adversely affect the value of a security. An insufficiently regulated market might also permit inappropriate practices that adversely affect an investment.
Stripped Securities Risk. Stripped securities are the separate income or principal components of debt securities. These securities are particularly sensitive to changes in interest rates, and therefore subject to greater fluctuations in price than typical interest bearing debt securities. For example, stripped mortgage-backed securities have greater interest rate risk than mortgage-backed securities with like maturities, and stripped treasury securities have greater interest rate risk than traditional government securities with identical credit ratings.
Smaller Company Securities Risk. Securities of companies with smaller market capitalizations tend to be more volatile and less liquid than larger company stocks. Smaller companies may have no or relatively short operating histories, or be newly public companies. Some of these companies have aggressive capital structures, including high debt levels, or are involved in rapidly growing or changing industries and/or new technologies, which pose additional risks.
U.S. Government Obligations Risk. U.S. Government obligations include securities issued by the U.S. Treasury, U.S. Government agencies or government-sponsored entities. While U.S. Treasury obligations are backed by the "full faith and credit" of the U.S. Government, securities issued by U.S. Government agencies or government-sponsored entities may not be guaranteed by the full faith and credit of the U.S. Government. The Government National Mortgage Association (GNMA), a wholly owned U.S. Government corporation, is authorized to guarantee, with the full faith and credit of the U.S. Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the Federal Housing Administration or the Department of Veterans Affairs. U.S. Government agencies or government-sponsored entities (i.e., not backed by the full faith and credit of the U.S. Government) include the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the U.S. Government. FHLMC guarantees the timely payment of interest and ultimate collection or scheduled payment of principal, but its participation certificates are not backed by the full faith and credit of the U.S. Government. If a government-sponsored entity is unable to meet its obligations, the performance of a Fund that holds securities of the entity will be adversely impacted. U.S. Government obligations are subject to low but varying degrees of credit risk, and are still subject to interest rate and market risk.
Value Style Investment Risk. Value stocks can perform differently from the market as a whole and from other types of stocks. Value stocks may be purchased based upon the belief that a given security may be out of favor. Value investing seeks to identify stocks that have depressed valuations, based upon a number of factors which are thought to be temporary in nature, and to sell them at superior profits when their prices rise in response to resolution of the issues which caused the valuation of the stock to be depressed. While certain value stocks may increase in value more quickly during periods of anticipated economic upturn, they may also lose value more quickly in periods of anticipated economic downturn. Furthermore, there is the risk that the factors which caused the depressed valuations are longer term or even permanent in nature, and that there will not be any rise in valuation. Finally, there is the increased risk in such situations that such companies may not have sufficient resources to continue as ongoing businesses, which would result in the stock of such companies potentially becoming worthless.
MANAGEMENT OF THE FUNDS
The following provides additional information regarding the investment adviser, investment sub-adviser and portfolio manager(s) of your Acquiring Fund as referenced in the section entitled "Merger Summary."
Investment Adviser
Funds Management is the investment adviser to your Acquiring Fund and will continue to be the investment adviser to your Acquiring Fund following the Merger.
The following are some key facts about Funds Management:
Funds Management is an indirect, wholly-owned subsidiary of Wells Fargo & Company ("Wells Fargo").
Funds Management was created to assume the mutual fund advisory responsibilities of Wells Fargo Bank, N.A. ("Wells Fargo Bank") and is an affiliate of Wells Fargo Bank, which was founded in 1852 and is the oldest bank in the western United States and is one of the largest banks in the United States.
Funds Management is located at 525 Market Street, San Francisco, California 94105, and Wells Fargo is located at 420 Montgomery Street, San Francisco, California 94163.
Advisory Fees
As compensation for its advisory services to your Acquiring Fund, Funds Management is entitled to receive a monthly fee at the annual rates indicated below, as a percentage of the Acquiring Fund's average daily net assets.
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Total Return Bond Fund | First $500 million First $500 million | 0.400% 0.400% | ||
Next $500 million Next $500 million | 0.375% 0.375% | |||
Next $2 billion Next $2 billion | 0.350% 0.350% | |||
Next $2 billion Next $2 billion | 0.325% 0.325% | |||
Over $5 billion Over $5 billion | 0.300% 0.300% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Omega Growth Fund | First $500 million First $500 million | 0.550% 0.550% | ||
Next $500 million Next $500 million | 0.500% 0.500% | |||
Next $1 billion Next $1 billion | 0.450% 0.450% | |||
Next $2 billion Next $2 billion | 0.425% 0.425% | |||
Over $4 billion Over $4 billion | 0.400% 0.400% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Core Equity Fund | First $500 million First $500 million | 0.550% 0.550% | ||
Next $500 million Next $500 million | 0.500% 0.500% | |||
Next $1 billion Next $1 billion | 0.450% 0.450% | |||
Next $2 billion Next $2 billion | 0.425% 0.425% | |||
Over $4 billion Over $4 billion | 0.400% 0.400% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Small/Mid Cap Value Fund1 | First $500 million First $500 million | 0.750% 0.750% | ||
Next $500 million Next $500 million | 0.700% 0.700% | |||
Next $1 billion Next $1 billion | 0.650% 0.650% | |||
Next $1 billion Next $1 billion | 0.625% 0.625% | |||
Over $3 billion Over $3 billion | 0.600% 0.600% |
1 | Reflects fees which will be in effect as of May 1, 2010. |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Small Cap Growth Fund1 | First $500 million First $500 million | 0.750% 0.750% | ||
Next $500 million Next $500 million | 0.700% 0.700% | |||
Next $1 billion Next $1 billion | 0.650% 0.650% | |||
Next $1 billion Next $1 billion | 0.625% 0.625% | |||
Over $3 billion Over $3 billion | 0.600% 0.600% |
1 | Reflects fees which will be in effect as of May 1, 2010. |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT International Core Fund | First $500 million First $500 million | 0.750% 0.750% | ||
Next $500 million Next $500 million | 0.700% 0.700% | |||
Next $1 billion Next $1 billion | 0.650% 0.650% | |||
Next $2 billion Next $2 billion | 0.625% 0.625% | |||
Over $4 billion Over $4 billion | 0.600% 0.600% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Intrinsic Value Fund | First $500 million First $500 million | 0.550% 0.550% | ||
Next $500 million Next $500 million | 0.500% 0.500% | |||
Next $1 billion Next $1 billion | 0.450% 0.450% | |||
Next $2 billion Next $2 billion | 0.425% 0.425% | |||
Over $4 billion Over $4 billion | 0.400% 0.400% |
For the Acquiring Fund's most recent fiscal year, the aggregate advisory fee paid to Funds Management and Wells Capital was as follows:
Fund | As a % of average daily net assets | |||
Wells Fargo Advantage VT Total Return Bond Fund | 0.06% 0.06% | |||
Wells Fargo Advantage VT Omega Growth Fund1 | N/A N/A | |||
Wells Fargo Advantage VT Core Equity Fund1 | N/A N/A | |||
Wells Fargo Advantage VT Small/Mid Cap Value Fund | 0.00% 0.00% | |||
Wells Fargo Advantage VT Small Cap Growth Fund | 0.69% 0.69% | |||
Wells Fargo Advantage VT International Core Fund | 0.00% 0.00% | |||
Wells Fargo Advantage VT Intrinsic Value Fund1 | N/A N/A |
1 | Since the Acquiring Fund is a shell fund, it has not yet paid any advisory fees to Funds Management. |
Sub-Adviser
Wells Capital Management Incorporated ("Wells Capital"), an affiliate of Funds Management and an indirect wholly owned subsidiary of Wells Fargo, located at 525 Market Street, San Francisco, California 94105, is the sub-adviser for the Acquiring Funds. Wells Capital is responsible for the day-to-day investment management activities of the Acquiring Funds. Wells Capital is a registered investment adviser that provides investment advisory services for registered mutual funds, company retirement plans, foundations, endowments, trust companies, and high net-worth individuals.
Sub-Advisory Fees
For providing investment sub-advisory services to an Acquiring Fund, Wells Capital is entitled to receive monthly fees at the annual rates indicated below as a percentage of the Fund's average daily net assets. These fees may be paid by Funds Management or directly by the Fund. If a sub-advisory fee is paid directly by a Fund, the compensation paid to Funds Management for advisory fees will be reduced accordingly so that the Fund will not pay, in the aggregate, more than the amounts shown above as being due to Funds Management.
While the sub-adviser of Wells Fargo Advantage International Core Fund is currently EIMC, it is anticipated that the sub-adviser will be changed to Wells Capital in advance of or at the Closing of the Merger. The portfolio manager of Wells Fargo Advantage International Core Fund will remain the same.
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Total Return Bond Fund | First $100 million First $100 million | 0.20% 0.20% | ||
Next $200 million Next $200 million | 0.175% 0.175% | |||
Next $200 million Next $200 million | 0.15% 0.15% | |||
Over $500 million Over $500 million | 0.10% 0.10% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Omega Growth Fund | First $100 million First $100 million | 0.35% 0.35% | ||
Next $100 million Next $100 million | 0.30% 0.30% | |||
Next $300 million Next $300 million | 0.20% 0.20% | |||
Over $500 million Over $500 million | 0.15% 0.15% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Core Equity Fund | First $100 million First $100 million | 0.35% 0.35% | ||
Next $100 million Next $100 million | 0.30% 0.30% | |||
Next $300 million Next $300 million | 0.20% 0.20% | |||
Over $500 million Over $500 million | 0.15% 0.15% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Small/Mid Cap Value Fund | First $100 million First $100 million | 0.55% 0.55% | ||
Next $100 million Next $100 million | 0.50% 0.50% | |||
Over $200 million Over $200 million | 0.40% 0.40% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Small Cap Growth Fund | First $100 million First $100 million | 0.55% 0.55% | ||
Next $100 million Next $100 million | 0.50% 0.50% | |||
Over $200 million Over $200 million | 0.40% 0.40% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT International Core Fund | First $200 million First $200 million | 0.45% 0.45% | ||
Over $200 million Over $200 million | 0.40% 0.40% |
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Intrinsic Value Fund | First $250 million First $250 million | 0.35% 0.35% | ||
Next $750 million Next $750 million | 0.275% 0.275% | |||
Over $1 billion Over $1 billion | 0.20% 0.20% |
Sub-Advisory Fees
Metropolitan West Capital Management, LLC (MetWest Capital), a subsidiary of Wells Fargo and an affiliate of EIMC, is the sub-adviser to Wells Fargo Advantage VT Intrinsic Value Fund. As sub-adviser, MetWest Capital manages the Fund's investments on a day-to-day basis. MetWest Capital has been managing investment portfolios since 1997 and is located at 610 Newport Center Drive, Suite 1000, Newport Beach, CA 92660.
For providing investment sub-advisory services to an Acquiring Fund, MetWest Capital is entitled to receive monthly fees at the annual rates indicated below, which are stated as a percentage of the Fund's average daily net assets. These fees may be paid by Funds Management or directly by the Fund. If a sub-advisory fee is paid directly by a Fund, the compensation paid to Funds Management for advisory fees will be reduced accordingly.
Fund | Breakpoint | Fee | ||
Wells Fargo Advantage VT Intrinsic Value Fund | First $250 million First $250 million | 0.35% 0.35% | ||
Next $750 million Next $750 million | 0.275% 0.275% | |||
Over $1 billion Over $1 billion | 0.20% 0.20% |
For a discussion regarding the basis for the approval of each Acquiring Fund's investment advisory agreements by its Board of Trustees, please see the Acquiring Fund's (other than the Shell Funds) shareholder report for the period ended June 30, 2009.
Administration and Transfer Agency Fees
Wells Fargo Advantage Funds and Evergreen funds charge fees for administration and transfer agency services in different ways. The Evergreen funds typically pay separate fees for administration and transfer agency services. These fees are imposed by the Evergreen funds on a fund-wide basis, so that shareholders of all classes share equally in the fees. Wells Fargo Advantage Funds pay Funds Management an administrative fee. The administrative fee is paid in two components. One component is paid on a fund-wide basis equally, while the other fee is applied on a class-by-class basis and at rates that differ among classes. Funds Management provides or obtains transfer agency services for the Funds as part of its administrative service, and the portion of the administrative fee paid on a class-by-class basis is intended in part to compensate Funds Management for providing or obtaining those transfer agency services. As a result of these class allocations, the fees that former Evergreen fund shareholders of certain classes will bear after the Mergers relating to transfer agency services will rise, while former Evergreen fund shareholders of certain other classes will experience a decline in those fees. The administration and transfer agency fees paid by the Funds are included among the expenses that comprise the "Other Expenses" column of the Annual Fund Operating Expense tables included in Exhibit C of this prospectus/proxy statement. Each Fund's SAI (or, in the case of a Shell Fund, the Merger SAI) contains more information regarding the administration and transfer agency service fees borne by the Funds.
Portfolio Managers
EVERGREEN VA CORE BOND FUND INTO WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
Troy Ludgood
Mr. Ludgood is jointly responsible for managing the Wells Fargo Advantage VT Total Return Bond Fund, which he has managed since 2007. In 2008, Mr. Ludgood was named as co-head and senior portfolio manager of the Montgomery Fixed Income Strategies Team at Wells Capital, where he has also served as a portfolio manager since 2007, Director of Credit Trading since 2006, and a senior credit trader since 2004. Prior to joining Wells Capital, he was a trader at Lehman Brothers since 2000. Education: B.S., Industrial Engineering, Georgia Institute of Technology; M.B.A., Wharton School of the University of Pennsylvania.
Thomas O'Connor, CFA
Mr. O'Connor is jointly responsible for managing the Wells Fargo Advantage VT Total Return Bond Fund, which he has managed since 2003. In 2008, Mr. O'Connor was named as co-head of the Montgomery Fixed Income Strategies Team at Wells Capital, where he has also served as a senior portfolio manager since 2007 and portfolio manager since 2003. Mr. O'Connor is responsible for identifying relative value in the mortgage and structural product sectors of the market. Prior to joining Wells Capital, Mr.O'Connor was a portfolio manager in the Fixed Income Division of Montgomery Asset Management from 2000 to 2003. Education: B.A., Business Administration, University of Vermont.
EVERGREEN VA OMEGA FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND INTO WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND
Aziz Hamzaogullari, CFA
Mr. Hamzaogullari is a Managing Director and Director of Research with the Large Cap Core Growth Equity team of Wells Capital's Equity Management group. As head of the Large Cap Research Team, he is responsible for the research and investment process and management of the research team. He has been with Wells Capital or one of its predecessor firms since 2001 and Director of Research since 2003. In 2006, he was named Portfolio Manager. Prior to joining Wells Capital, he was a Senior Equity Analyst and Portfolio Manager for Manning Napier Advisors, Inc. Mr. Hamzaogullari has been working in the investment management field since 1993. He received a BS in management from Bilkent University in Turkey and an MBA from George Washington University. He has been awarded the use of the Chartered Financial Analyst (CFA) designation from the CFA Institute, and he is a member of the Boston Security Analysts Society and the CFA Institute.
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND INTO WELLS FARGO ADVANTAGE VT CORE EQUITY FUND
Walter T. McCormick, CFA
Mr. McCormick is a Managing Director, Senior Portfolio Manager, and Head of the Large Cap Value/Core Equity team of Wells Capital's Equity Management Group. He returned to Wells Capital in 2002. Previously, he served as Head of the Large Cap Core Growth team at Keystone Investments, a predecessor firm (1984-1998). Additionally, Walter has served as Head of the Large Cap Value team at David L. Babson & Co., (1998–2000) and Senior Portfolio Manager and Director of Equity Investments for Rhode Island Hospital Trust National Bank.
Emory W. (Sandy) Sanders, Jr., CFA
Mr. Sanders is a Director, Portfolio Manager and Senior Equity Analyst with the Large Cap Equity Research team of Wells Capital's Equity Management group. His responsibilities include the analysis of technology securities, specializing in telecommunications equipment, internet software, and electronic manufacturing service companies. He also is the Consumer Staples Research Team leader, with direct coverage including packaged foods, personal care, household goods, and tobacco. He has been with Wells Capital or one of its predecessor firms since 1997. Mr. Sanders has been working in the investment management field since 1997. He received a BS from the University of Vermont (1996). He has been awarded the use of the Chartered Financial Analyst (CFA) designation by the CFA Institute, and he is a member of the Boston Securities Analysts Society.
EVERGREEN VA SPECIAL VALUES FUND INTO WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND1
1 | Reflects the portfolio management of the Fund as of May 1, 2010. |
I. Charles Rinaldi
Mr. Rinaldi serves as lead portfolio manager for the Wells Fargo Advantage VT Small/Mid Cap Value Fund, and in this capacity is jointly responsible for managing the Fund, which he has managed, along with its predecessor fund, since 2001. Mr. Rinaldi joined Wells Capital Management in 2005 as senior portfolio manager responsible for day-to-day management of its small value and small/mid cap value strategies. Prior to joining Wells Capital, he was a portfolio manager with Strong Capital Management, Inc. (SCM) since 1997. Education: B.A., Biology, St. Michael's College; M.B.A., Finance, Babson College.
EVERGREEN VA GROWTH FUND INTO WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
Jerome "Cam" Philpott, CFA
Mr. Philpott is jointly responsible for managing the Wells Fargo Advantage VT Small Cap Growth Fund, which he has managed, along with its predecessor fund, since 1993. He joined Wells Capital in 2003 as a portfolio manager. Prior to joining Wells Capital, Mr. Philpott was a portfolio manager with Montgomery Asset Management, (Montgomery) which he joined in 1991 as an analyst for the Small Cap Equity team. Education: B.A., Economics, Washington and Lee University; M.B.A., Darden School - University of Virginia.
Stuart Roberts
Mr. Roberts is jointly responsible for managing the Wells Fargo Advantage VT Small Cap Growth Fund, which he has managed, along with its predecessor, since 2003. Mr. Roberts joined Wells Capital in 2003 as a portfolio manager. Prior to joining Wells Capital, he was a senior portfolio manager with Montgomery Asset Management for the Small Cap Growth Fund. Prior to joining Montgomery, Mr. Roberts was vice president and portfolio manager at Founders Asset Management, where he was responsible for three separate growth oriented small-cap mutual funds. Education: B.A., Economics, Bowdoin College; M.B.A., University of Colorado.
EVERGREEN VA INTERNATIONAL EQUITY FUND INTO WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
Francis X. Claró, CFA
Mr. Claró is responsible for managing the VT International Core Fund, which he has managed since 2009. Mr. Claró is a Managing Director, Senior Portfolio Manager and Head of Wells Capital's International Developed Markets team. He has been with Wells Capital or one of its predecessor firms since 1994. Previously, he worked as an Investment Officer with the Inter-American Investment Corporation (1992-1994), where he was responsible for making private equity and debt investments. He also served as a Senior Consultant for Price Waterhouse's International Consulting practice in the United States and United Kingdom (1986-1990). Mr. Claró has been working in the investment management field since 1986. He received a BS in Business from ESADE in Barcelona, Spain (1983), a MS in Economics from the London School of Economics (1984), and a MBA from the Harvard Business School (1991). He has been awarded the Chartered Financial Analyst (CFA) designation by the CFA Institute, and he is a member of the Boston Security Analysts Society.
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND AND WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND INTO WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND
Howard Gleicher, CFA
Mr. Gleicher is CEO, Chief Investment Officer and Lead Strategist for the Large Cap Intrinsic Value, International Core Value and Global Intrinsic Equity strategies and serves as a Senior Analyst with MetWest Capital's investment team. He co-founded MetWest Capital with Gary W. Lisenbee and Steve Borowski in 1997. Prior to co-founding MetWest Capital, he served as Principal, Portfolio Manager and Investment Policy Committee member with Palley-Needelman Asset Management, Inc. and as Vice President and Equity Portfolio Manager with Pacific Investment Management Company (PIMCO). Mr. Gleicher has been working in the investment management field since 1985. He earned both a BS and a Master of Science in Electrical Engineering from Stanford University. He also holds a MBA from Harvard Business School. Mr. Gleicher has been awarded the use of the Chartered Financial Analyst (CFA) designation by the CFA Institute.
Gary W. Lisenbee
Mr. Lisenbee is President and serves as a Senior Analyst with MetWest Capital's investment team. He co-founded MetWest Capital with Howard Gleicher, CFA and Steve Borowski in 1997. Prior to co-founding MetWest Capital, he served as Principal, Portfolio Manager and Investment Policy Committee member with Palley-Needelman Asset Management, Inc., as Senior Vice President, Portfolio Manager and Investment Policy Committee member with Van Deventer Hoch, Investment Counsel and as Partner and Research Analyst with Phelps Investment Management. Mr. Lisenbee has been working in the investment management field since 1973. He earned both a BA in Accounting and a MA in Economics from California State University, Fullerton.
David M. Graham
Mr. Graham is a Senior Vice President and serves as a Senior Analyst with MetWest Capital's investment team. He joined MetWest Capital in 2000. Previously, he served as Senior Portfolio Manager and Research Analyst with Wells Fargo, as Vice President and Director of Research with Palley-Needelman Asset Management, Inc. and as Senior Research Analyst with NWQ Investment Management Company, LLC. Mr. Graham has been working in the investment management field since 1968. He earned a B.S. in Economics from Occidental College and a MBA from Stanford University.
Jeffrey Peck
Mr. Peck is Director of Research and serves as a Senior Analyst with MetWest Capital's investment team. He joined MetWest Capital in 2004. Previously, he served as Equity Research Analyst with both Janney Montgomery Scott and Bear Stearns Co., Inc. Mr. Peck has been working in the investment management field since 1995. He earned a B.S. in Mechanical Engineering from State University of New York, Buffalo and a M.B.A. from New York University's Stern School of Business. In 2004, Mr. Peck received the honor of being named a Best on the Street Analyst by The Wall Street Journal.
Each Acquiring Fund's Statement of Additional Information (or, in the case of the Shell Funds, the Merger SAI) contains additional information about the Acquiring Fund's portfolio managers, including other accounts managed, ownership of Acquiring Fund shares and elements of compensation.
MERGER INFORMATION
REASONS FOR THE MERGERS -- EVERGREEN FUNDS
After the merger of the Wells Fargo and Wachovia organizations, representatives of the combined Wells Fargo asset management organization ("Funds Management") approached the Trustees of the Evergreen Funds with a proposal to combine the Evergreen and Wells Fargo Advantage Fund families. Funds Management's representatives cited a number of important considerations favoring an eventual combination of the Fund families, including, among others, the integration of the Evergreen and Wells Fargo investment management organizations; possible economies of scale through the increased size of the combined Fund family; contractual savings from service providers to the combined Funds; the ability to select the best Funds from each family to continue as part of the combined Fund family; and more seamless integration of the Evergreen Funds into the combined Wells Fargo investment and shareholder servicing platforms and programs.
Over the course of 2009, the Board of Trustees of the Evergreen Funds worked closely with the management teams of Funds Management and EIMC to refine the proposed combination of the Fund families. The proposed combination involved a large number of merger transactions, including the Mergers described in this Prospectus/Proxy Statement, each of which would result in an Evergreen Fund merging into a Wells Fargo Advantage Fund. References to "mergers" in this section refer generally to the merger transactions (including each Merger described in this Prospectus/Proxy Statement, where applicable) involved in the combination of the Evergreen Fund family with the Wells Fargo Advantage Fund family. In their discussions, the Board made clear that, although the combination of the Fund families may well benefit the shareholders of the Evergreen Funds as a whole, the Board would consider carefully the impact of the proposed combination on each Evergreen Fund and its shareholders individually and would evaluate each merger independently. Areas of discussion, as more fully described below, included the investment programs of the Evergreen and Wells Fargo Advantage Funds proposed to be combined; the portfolio management teams with responsibility for the management of the Wells Fargo Advantage Funds after the combinations; and the effects of the combinations on the expenses born directly and indirectly by the investors in the Funds. The Trustees also considered carefully the ongoing governance of the Wells Fargo Advantage Fund family after the combination.
The Trustees reviewed information about each merger and the Evergreen Funds and Wells Fargo Advantage Funds participating in each merger at numerous in-person and telephonic meetings occurring throughout 2009. This included information about, among other things, the relative sizes of the Funds, the Funds' investment goals and principal investment strategies, their specific portfolio characteristics, the potential for diversification and economies of scale as a result of or following the merger, and the performance records, portfolio management teams, and expenses of the Funds (as is described in more detail below for each of the Mergers). The Trustees considered performance, fee and expense information throughout the year. The fee and expense information included in this Prospectus/Proxy Statement may be based on different periods than the information that the Trustees considered. The Trustees requested additional information from representatives of EIMC and Funds Management as they considered appropriate. The Trustees retained an independent industry consultant to assist them in evaluating the mergers and related information. They also met separately on numerous occasions with independent legal counsel to the Independent Trustees.
The Trustees met with management of EIMC and Funds Management repeatedly during the summer and fall of 2009. As a result of these ongoing discussions, management of EIMC and Funds Management made a number of changes to the proposed mergers, reflecting, among other things, a number of significant changes that the Trustees proposed in the belief that the changes would further improve the mergers for Evergreen Fund shareholders. Those changes included such things as changes in the identities of Funds proposed to participate in certain mergers; changes in portfolio management teams; changes in the Wells Fargo Advantage Fund share classes that Evergreen Fund shareholders would receive in certain mergers; reductions in advisory fee schedules in certain instances; and the introduction of additional break points or modifications in break point schedules for certain Wells Fargo Advantage Funds which, while not impacting current advisory fees, offered the potential for future advisory fee savings if the Funds increase in size as a result of or following the mergers. Many of the changes, to the extent applicable, are reflected in the descriptions of the Mergers presented in this Prospectus/Proxy Statement.
At a meeting held on December 30, 2009, the Board of Trustees of the Evergreen Funds, including all of the Independent Trustees, considered and unanimously approved each of the mergers. The Board of Trustees determined that each merger was in the best interests of the applicable Evergreen Fund and that the interests of existing shareholders of each applicable Evergreen Fund would not be diluted as a result of the merger.
The Trustees' determinations were based on a comprehensive evaluation of the information provided to them. During their review, the Trustees did not identify any particular information or consideration that was all-important or controlling, and each Trustee attributed different weights to various factors. Although the Trustees considered broader issues arising in the context of the combination of two large mutual fund families, their determinations with respect to each proposed merger were made on a fund-by-fund basis. For each merger the Trustees considered a number of additional matters, including the general factors described above, any significant differences between the investment objectives and policies of the Funds proposed to be merged, the historic investment performance of the Funds proposed to be merged, and the anticipated expenses of the Wells Fargo Advantage Funds following the merger (each referred to in this discussion as a "combined Fund"). Detailed information about each of these factors is provided elsewhere in this Prospectus/Proxy Statement. Set out below is a brief summary of the Trustees' considerations of a number of the most important, but not necessarily all, of the factors considered by the Board and the Independent Trustees.
Differences in overall approaches to fees; contract differences; Wells Fargo Expense Limitations.
General. The Trustees reviewed differences between the contractual arrangements of the Evergreen Funds and the Wells Fargo Advantage Funds, including arrangements with investment advisers, sub-advisers, administrators, transfer agents, and custodians, considering both services and fees. In relevant instances, the Trustees also considered that, in some instances, an Evergreen Fund was proposed to be reorganized into a Wells Fargo Advantage Fund that was part of a Master/Gateway structure. Many of those differences are highlighted elsewhere in this Prospectus/Proxy Statement.
Expense limitations. The Trustees noted that the expense limitations currently in effect for the Evergreen Funds are generally voluntary expense limitations implemented by EIMC, which EIMC may terminate at any time. The Trustees considered that EIMC would not necessarily be willing to provide those expense limitations indefinitely if the mergers did not occur. (Notwithstanding the voluntary nature of these expense limitations, as a result of discussions of the proposed combination of the Fund families, in December 2009, EIMC management agreed not to reduce or terminate any voluntary expense limitations then in place for the Evergreen Funds through the completion of the mergers.) By contrast, they considered that the expense limitations currently in effect for the Wells Fargo Advantage Funds ("Wells Fargo Expense Limitations") are contractual obligations on the part of Funds Management, and may only be changed by a vote of the Trustees of the Wells Fargo Advantage Funds. The Trustees took into account Funds Management's representations that it has historically sought the termination or relaxation of any Wells Fargo Expense Limitation only in unusual and isolated circumstances. The Trustees placed significant weight on Funds Management's assertion in this regard and on the fact that they had obtained Funds Management's commitment that it would not, in any event, seek or propose to terminate or raise any applicable Wells Fargo Expense Limitation for a period of at least three years following the merger. Thus, in any case where a Wells Fargo Advantage Fund's net expense ratio after a merger would be lower than that of the corresponding Evergreen Fund due to a Wells Fargo Expense Limitation, the Trustees considered that the Wells Fargo Expense Limitation would be a contractual commitment in effect for at least three years.
Administrative fees. The Trustees noted that the Evergreen Funds typically pay separate fees for administration and transfer agency services. These fees are imposed on a Fund-wide basis, so that shareholders of all classes share equally in the fees. The Trustees noted that the Wells Fargo Advantage Funds pay a single fee to Funds Management for both administrative and transfer agency services, and that that fee is charged in part on a Fund-wide basis, and in part separately, and at different rates, to the various share classes within a Fund. In considering the effect of these differences, the Trustees noted that the differences would not likely result in any decrease in the nature or quality of services provided to shareholders and that they may, in some cases, result in a more precise alignment of expenses charged to a share class with services provided to shareholders of that class. The Trustees considered that Funds Management retained a third party to provide certain transfer agency services to the Wells Fargo Advantage Funds, and had negotiated improved fee arrangements with this service provider that were contingent, in part, upon the integration of the Fund families.
Share classes. The Trustees considered differences between the share classes offered by the Evergreen Funds and those offered by the Wells Fargo Advantage Funds. They concluded, in light of the services provided to the shareholders of the different classes and the overall expenses to be paid by shareholders of those classes, that the differences were not such as to prevent consummation of the mergers.
Method of comparing fees. Each Wells Fargo Advantage Fund pays fees to Funds Management or its affiliates for investment advisory and administrative (including transfer agency) services. Each Evergreen Fund pays fees to EIMC or its affiliates for investment advisory, administrative, and transfer agency services. In comparing fees charged by EIMC (and affiliates) with those charged by Funds Management (and affiliates), the Trustees compared the aggregate amount paid by the Evergreen Funds for investment advisory, administrative, and transfer agency services with the aggregate amount paid by the Wells Fargo Advantage Funds for investment advisory and administrative (including transfer agency) services (the aggregate of those amounts paid by the Wells Fargo Advantage Funds referred to below as the "Aggregate Wells Fargo Fees" paid by a Wells Fargo Advantage Fund), as well as the Funds' gross operating expense ratios and net operating expense ratios (net of voluntary expense limitations and, in the case of Wells Fargo Advantage Funds, net of Wells Fargo Expense Limitation). In addition, the Trustees considered the Funds' expenses in light of the average expenses, and average advisory, administrative, and transfer agency fees, paid by other funds in a peer group of competitive funds selected by Lipper Inc.
During the course of their consideration of fees that the Wells Fargo Advantage Funds pay for investment advisory services, the Trustees noted that in certain cases, Funds Management and/or its affiliates provide to other clients advisory services that are comparable in some degree to the advisory services that they provide to particular Wells Fargo Advantage Funds. The Trustees considered information that Funds Management provided regarding the rates at which those other clients pay advisory fees. Fees charged to those other clients (generally large institutions) were generally lower than those charged to the respective Wells Fargo Advantage Funds. The Trustees also noted that certain fees paid to Funds Management by the variable trust Wells Fargo Advantage Funds were lower than those paid by comparable retail Wells Fargo Advantage Funds. They considered management's representation that many of those fees are set in light of the expenses of the variable products through which the variable trust Wells Fargo Advantage Funds are sold, and that, as a result, the market for the variable Funds, and the pricing of the variable Funds, is typically different from those of the retail Funds.
Custody and fund accounting savings. The Trustees considered that Funds Management had been able to negotiate improved fee arrangements for custody and fund-accounting services for the Wells Fargo Advantage Funds, which were contingent in part upon the integration of the two fund families. The Wells Fargo Advantage Funds contract directly for these services, so that these improved fee arrangements will operate to the benefit of those Funds' shareholders, including the former Evergreen Fund shareholders, following the mergers.
Tax considerations.
The Trustees considered the relative tax situations of the Evergreen Funds and the resulting impact of the mergers on the Funds' shareholders. They reviewed information relating to the Funds' capital loss carryforwards, unrealized and realized gains and losses, and the potential impact of the mergers on these tax attributes. In the case of each merger, the Trustees determined, based upon an evaluation of a variety of factors including the size of the capital loss carryforwards and unrealized and realized gains and losses, the size of each Fund participating in the merger, the expiration schedule for the capital loss carryforwards, and the likelihood that a Fund would be able to take advantage of its capital loss carryforwards, that any loss or limitation on the benefit of a Fund's capital loss carryforward or other tax attributes as a result of the merger should not be seen, in light of all of the aspects of the proposed merger, as dilutive of shareholder interests.
Governance.
The Trustees considered information regarding the Trustees of the Wells Fargo Advantage Funds, and a number of the Evergreen Trustees met with all or some of the Wells Fargo Trustees. They considered the experience and expertise of those Trustees. The Trustees also considered, and placed substantial reliance on the facts, that two members of the Evergreen Funds Board of Trustees (expected to be Michael S. Scofield and K. Dun Gifford) would be joining the Wells Fargo Advantage Funds Board of Trustees upon consummation of the first of the mergers and would resign from the Evergreen Funds Board of Trustees at that time, and that the remaining members of the Evergreen Funds Board of Trustees would serve in an advisory capacity for a period of two years following the mergers.
Consideration of investment matters and expenses.
Evergreen VA Core Bond Fund into Wells Fargo Advantage VT Total Return Bond Fund. The Trustees considered that the two Funds have generally similar investment objectives and policies. They considered that the Wells Fargo Advantage Fund has a longer and significantly better performance record than that of the Evergreen Fund. They considered that the Aggregate Wells Fargo Fees and gross expense ratio of the combined Fund would be higher than those of the Evergreen Fund, but that the net expense ratio of the combined Fund would be lower.
Evergreen VA Omega Fund into Wells Fargo Advantage VT Omega Growth Fund; Evergreen VA Fundamental Large Cap Fund into Wells Fargo Advantage VT Core Equity Fund. The Trustees considered that each Evergreen Fund would be merged into a new "shell" series of a Wells Fargo trust, and that an existing Wells Fargo Advantage Fund would be merged into that shell, as well. The Trustees considered that, in each case, the Evergreen Fund and the Wells Fargo Advantage shell Fund have generally similar investment objectives and policies. They noted that the Evergreen VA Fundamental Large Cap Fund's objective is to seek capital growth with the potential for current income and that its investment polices specifically permitted it to invest up to 20% of its assets in convertible securities; the Wells Fargo Advantage shell Fund's objective is to seek long-term capital appreciation and its policies do not specifically reserve the right to invest in convertible securities. Management represented to the Trustees that this difference would not result in any change in the management of the Wells Fargo Advantage Fund compared to the Evergreen Fund. The Trustees considered that, in each case, the portfolio management team of the Evergreen Fund would be the portfolio management team of the combined Fund. They noted that the Aggregate Wells Fargo Fees, gross expense ratio, and net expense ratio of Wells Fargo Advantage VT Core Equity Fund would be lower than those of Evergreen VA Fundamental Large Cap Fund. As to the other merger, they noted that the Aggregate Wells Fargo Fees and the gross expense ratio of the combined Funds would be higher than those of the Evergreen Funds in each case, but that the net expense ratio of the combined Fund would be unchanged from that of the Evergreen Fund. In their consideration of the effect of the expenses of the reorganization of the Evergreen Funds, the Trustees assumed that the related Wells Fargo Advantage Fund mergers into the new Wells Fargo Advantage shell Funds would be effected, as well.
Evergreen VA Special Values Fund into Wells Fargo Advantage VT Small/Mid Cap Value Fund. The Trustees considered that the two Funds have generally similar investment objectives and policies, although the Wells Fargo Advantage Fund may invest more of its assets in foreign securities than may the Evergreen Fund. They considered that the Wells Fargo Advantage Fund has a better performance record than that of the Evergreen Fund; they noted that the investment policies of the Wells Fargo Advantage Fund would be revised to place greater emphasis on small-cap (as opposed to mid-cap) companies, and considered information regarding the portfolio manager's performance in small-cap investments generally. They considered that the Aggregate Wells Fargo Fees, gross expense ratio, and net expense ratio of the combined Fund would be lower than those of the Evergreen Fund.
Evergreen VA Growth Fund into Wells Fargo Advantage VT Small Cap Growth Fund. The Trustees considered that the two Funds have generally similar investment policies. They noted that each Fund uses as its benchmark index, the Russell 2000® Growth Index, an index of small capitalization companies. They noted that the Evergreen Fund's investment policies would generally allow it to invest a greater percentage of its assets in larger companies within the market capitalization range of the index, while the Wells Fargo Advantage Fund must invest most of its assets in companies with market capitalizations of $2 billion or less. They considered that the Wells Fargo Advantage Fund has a better performance record than that of the Evergreen Fund. They noted that the Aggregate Wells Fargo Fees of the combined Fund are higher than those of the Evergreen Fund, but considered that gross expense ratio and net expense ratio of the combined Fund would be lower than those of the Evergreen Fund.
Evergreen VA International Equity Fund into Wells Fargo Advantage VT International Core Fund. The Trustees considered that the Evergreen Fund and the Wells Fargo Advantage Fund have generally similar investment objectives and policies. They noted that the Wells Fargo Advantage Fund's investment objective will not include modest income as a secondary consideration; the Evergreen Fund's objective includes such a consideration. Management represented to the Trustees that this difference would not result in any change in the management of the Wells Fargo Advantage Fund compared to the Evergreen Fund. The Trustees considered that the portfolio management team of the Evergreen Fund would be the portfolio management team of the combined Fund. They noted that the Aggregate Wells Fargo Fees and the gross expense ratio of the combined Fund would be higher than those of the Evergreen Fund, but that the net expense ratio of the combined Fund would be unchanged from that of the Evergreen Fund.
REASONS FOR THE MERGERS -- WELLS FARGO ADVANTAGE FUNDS
At regular and special Board meetings in May, June, August, November and December 2009 and January 2010, the Board of Trustees of the Wells Fargo Target Trust considered the proposed combination of the Evergreen Fund Family and the Wells Fargo Advantage Funds, which includes the proposed Mergers of the Wells Fargo Advantage VT Large Company Growth Fund into the newly created Wells Fargo Advantage VT Omega Growth Fund, the Wells Fargo Advantage VT Equity Income Fund and Wells Fargo Advantage VT C&B Large Cap Fund into the newly created Wells Fargo Advantage VT Intrinsic Value Fund, and the Wells Fargo Advantage VT Large Company Core Fund into the newly created Wells Fargo Advantage VT Core Equity Fund. In connection with these Board meetings, Funds Management provided extensive background materials and analyses to the Board. These materials included information on the investment objectives and principal investment strategies of the Target Funds and the Acquiring Funds, comparative operating expense ratios, certain tax information, asset size, risk profile and investment performance information, and an analysis of the projected benefits to Target Fund shareholders of the Mergers. Funds Management responded to questions and requests for additional information at these meetings and throughout the course of the Board's consideration of these matters.
After reviewing and discussing these materials and analyses, among themselves, with management, and with its legal advisers, on January 11, 2010, the Board unanimously approved the Plan. In its deliberations, the Board recognized that some of the benefits of the Plan would accrue to Funds Management and its affiliates rather than Target Fund shareholders. In this regard, the Board noted that Funds Management and its affiliates may benefit from the elimination of duplicative Funds and expenses, and from other cost savings resulting from the streamlining of the product line, among other things. The Board recognized the existence of these benefits in the context of evaluating the Plan overall and determining that the Merger of each Target Fund into the corresponding Acquiring Fund would be in the best interests of the Target Fund and its shareholders. The Board further determined that the interests of existing shareholders of each Target Fund would not be diluted as a result of the Merger.
Accordingly, the Board unanimously recommends that shareholders of each Target Fund vote to approve the Merger for the following reasons:
* STREAMLINED PRODUCT LINE AND ENHANCED VIABILITY
The Board noted that the Mergers of the Target Funds into the Acquiring Funds are part of the overall combination of the Evergreen Fund Family and the Wells Fargo Advantage Funds. The overall combination is intended to streamline the product offering of the fund family by combining funds with compatible investment objectives and principal investment strategies. This streamlining will enable management, distribution and other resources to be more effectively concentrated on a more focused group of portfolios.
Each Merger is expected to enhance the viability of the combined Acquiring Fund, which would include the Target Funds and, in the case of Wells Fargo Advantage VT Omega Growth Fund and Wells Fargo Advantage VT Core Equity Fund, a corresponding Evergreen Target Fund, subject to approval by their shareholders. By combining the Funds, the fund complex is also able to take steps towards eliminating duplicative costs and improving potential shareholder returns. The Board determined that the elimination of duplicative costs and the spreading of certain costs across a larger asset base can benefit shareholders by leading to reductions in operating expense ratios. Moreover, the Target Funds have not been able to achieve scale and have experienced net redemptions in recent years.
* PORTFOLIO MANAGEMENT
The Board considered the investment strategy similarities and differences described under Specific Considerations, below, and determined that the investment strategies of each Acquiring Fund were potentially beneficial for Target Fund shareholders. The Board received information about the portfolio managers who would be managing the Acquiring Funds and satisfied itself as to the nature and quality of advisory services expected to be provided for the benefit of the Acquiring Funds' shareholders.
* GREATER POTENTIAL ECONOMIES OF SCALE
The Board also considered that each Target Fund may benefit from the potential for greater economies of scale by merging into an Acquiring Fund that, assuming the other Target Fund(s) also merge into the Acquiring Fund, would have greater assets than each separate Target Fund currently has.
* COMPATIBLE OBJECTIVES AND INVESTMENT STRATEGIES
As discussed further below under "Specific Considerations" and in the section entitled "Investment Goal and Strategy Comparison," each Acquiring Fund and corresponding Target Fund has compatible investment objectives and principal investments strategies. As a result, the Merger is not expected to cause significant portfolio turnover or transaction expenses from the sale of securities that are incompatible with the investment objective(s) of the Acquiring Fund. The Board considered management's representation that the Merger is not expected to significantly alter the risk/potential return profile of any Target Fund shareholder's investment.
* COMPARATIVE PERFORMANCE
The Board considered that, in each Merger, the Acquiring Fund is a shell fund created for purposes of the Merger which will assume the accounting history and performance track record of the Wells Fargo or Evergreen Target Fund that it will most closely resemble. In the Mergers involving Wells Fargo Advantage VT Large Company Growth Fund and Wells Fargo Advantage VT Large Company Core Fund, the investment performance of the Evergreen Fund that the Acquiring Fund will most closely resemble has been superior to that of these two Funds over most periods. In the Merger of the Wells Fargo Advantage VT Equity Income Fund and Wells Fargo Advantage VT C&B Large Cap Fund into the newly created Wells Fargo Advantage VT Intrinsic Value Fund, the Board considered that the Acquiring Fund would be managed by a new team that has a better investment performance track record than that of either Target Fund. Shareholders can consult the chart in the section entitled "Fund Performance Comparison" for Fund-specific performance comparisons.
* TOTAL AND NET OPERATING EXPENSES OF THE FUNDS
The Board considered the total and net annual fund operating expenses for each Target Fund and corresponding Acquiring Fund. For each Merger, the Acquiring Fund class will have a lower or equal total and net operating expense ratio than the corresponding class of the Target Fund. Thus, all Target Fund shareholders will pay the same or lower fees as a result of the Merger. The Board also noted that Funds Management has committed to maintain the Acquiring Fund's pro forma net operating expense ratio cap for a 3-year period from the Closing Date if the Merger is consummated. Thus, Target Fund shareholders will not experience an increase in their net operating expense ratios for at least 3 years, and could potentially experience a reduction, as a result of the Merger. Shareholders can consult the section entitled "Fund Expense Comparison" for Fund-specific total and net operating expenses comparisons.
* EXPECTED TAX-FREE CONVERSION OF THE TARGET FUND SHARES
The Board also considered the expectation that each Merger will be treated as a "reorganization" for U.S. federal income tax purposes. If, prior to the Merger, a Target Fund shareholder holding shares in a non-tax deferred account were to redeem the Target Fund shares to invest the proceeds in another fund or other investment product, the shareholder generally would recognize gain or loss for U.S. federal income tax purposes upon the redemption of the shares. By contrast, by participating in the Mergers, it is expected that: (1) shareholders will not recognize a taxable gain or a loss on the exchange of Target Fund shares for shares of the same or a comparable Class of the corresponding Acquiring Fund; (2) shareholders will have the same tax basis in Acquiring Fund shares as in Target Fund shares; and (3) assuming that shareholders hold Target Fund shares as a capital asset, the holding period for the Acquiring Fund shares will include the period for which the shareholder held Target Fund shares. Shareholders will continue to have the right to redeem any or all shares at net asset value, net of any applicable CDSC, at any time, at which time, a shareholder generally would recognize a gain or loss for U.S. federal income tax purposes.
The Board also noted that Target Fund shares are predominantly owned by Contract Owners through insurance company separate accounts (that are accorded favorable tax treatment in the form of tax deferral) and that the Merger should have no U.S. federal income tax consequences on such Contract Owners even if it does not qualify as a "reorganization" as described above. Shareholders and Contract Owners should review the section entitled "Material U.S. Federal Income Tax Consequences of the Mergers" for a description of the material U.S. federal income tax consequences of the Mergers.
* EXPENSES OF THE MERGER
Funds Management and EIMC have agreed to bear all of the expenses of preparing, printing, and mailing the Prospectus/Proxy Statement and related solicitation expenses for the approval of the Mergers, so shareholders of the Target Funds and Acquiring Funds will not bear these costs.
Specific Considerations
The Board also considered certain factors specific to each Fund in concluding that each proposed Merger is in the best interests of each Target Fund's shareholders. Some of the specific key factors that the Board considered are detailed below.
Merger of the Wells Fargo Advantage VT Large Company Growth into the Wells Fargo Advantage VT Omega Growth Fund
The Board considered the benefits of combining funds that have similar investment objectives and principal investment strategies. In considering the Merger, the Board noted that, although the Wells Fargo Advantage VT Large Company Growth Fund and the Wells Fargo Advantage VT Omega Growth Fund both invest in equity securities, the Wells Fargo Advantage VT Large Company Growth Fund invests at least 80% of its net assets in the equity securities of large-capitalization companies, while the Wells Fargo Advantage VT Omega Growth Fund may invest at least 80% of its total assets in equity securities across all market capitalizations. Further, the Board considered that the Wells Fargo Advantage VT Large Company Growth Fund invests in 30 to 50 large capitalization companies, while the Wells Fargo Advantage VT Omega Growth Fund invests in 35 to 60 companies. In addition, the Board considered that that the Merger would result in a lower total operating expense ratio and the same net operating expense ratio for Wells Fargo Advantage VT Large Company Growth Fund shareholders. The Board also noted that the Evergreen Target Fund that the Acquiring Fund will most closely resemble has a stronger investment performance record than the Wells Fargo Advantage VT Large Company Growth Fund over all periods reviewed.
Merger of the Wells Fargo Advantage VT Equity Income Fund into the Wells Fargo Advantage VT Intrinsic Value Fund
The Board considered the benefits of combining funds that have similar investment objectives and principal investment strategies. In considering the Merger, the Board noted that the Wells Fargo Advantage VT Equity Income Fund invests at least 80% of its net assets in the equity securities of large-capitalization companies and the Wells Fargo Advantage VT Intrinsic Value Fund invests at least 80% of its total assets in the equity securities of large-capitalization companies. The Board further noted that the Wells Fargo Advantage VT Equity Income Fund invests those assets in income-producing equity securities of large-capitalization companies with market capitalizations of $3 billion or more, while the Wells Fargo Advantage VT Intrinsic Value Fund invests more generally in equity securities of large-capitalization companies with market capitalizations within the range of the Russell 1000 Value Index. As of its last reconstitution in June 2009, the Russell 1000 Value Index had a market capitalization range of approximately $617 million to $341 billion. The Board also noted that the Wells Fargo Advantage VT Intrinsic Value Fund may invest up to 20% of its total assets in foreign securities. The Board also considered that the Acquiring Fund would be managed by a new investment team with a stronger investment performance record than the investment team for the Wells Fargo Advantage VT Equity Income Fund over all periods reviewed. Apart from these factors, the Board considered that the Merger would result in a lower total operating expense ratio and the same net operating expense ratio for the Wells Fargo Advantage VT Equity Income Fund shareholders.
Merger of the Wells Fargo Advantage VT C&B Large Cap Value Fund into the Wells Fargo Advantage VT Intrinsic Value Fund
The Board considered the benefits of combining funds that have similar investment objectives and principal investment strategies. In considering the Merger, the Board noted that the Wells Fargo Advantage VT C&B Large Cap Value Fund invests at least 80% of its net assets in the equity securities of large-capitalization companies and the Wells Fargo Advantage VT Intrinsic Value Fund invests at least 80% of its total assets in the equity securities of large-capitalization companies. The Board further noted that the Wells Fargo Advantage VT C&B Large Cap Value Fund defines large-capitalization companies as those with market capitalizations of $3 billion or more, while the Wells Fargo Advantage VT Intrinsic Value Fund defines large-capitalization companies as securities of companies with market capitalizations within the range of the Russell 1000 Value Index. As of its last reconstitution in June 2009, the Russell 1000 Value Index had a market capitalization range of approximately $617 million to $341 billion. The Board further considered that both Funds employ a relatively focused portfolio of approximately 30 to 50 large-capitalization companies. In addition, the Board noted that the Wells Fargo Advantage VT Intrinsic Value Fund may invest up to 20% of its total assets in foreign securities. The Board also considered that the Acquiring Fund would be managed by a new investment team with a stronger investment performance record than the investment team for the Wells Fargo Advantage VT C&B Large Cap Value Fund over all periods reviewed. Apart from these factors, the Board also noted that the Merger would result in a lower total operating expense ratio and the same net operating expense ratio for Wells Fargo Advantage VT C&B Large Cap Value Fund shareholders.
Merger of the Wells Fargo Advantage VT Large Company Core Fund into the Wells Fargo Advantage VT Core Equity Fund
The Board considered the benefits of combining funds that have identical investment objectives and similar principal investment strategies. In considering the Merger, the Board noted that both the Wells Fargo Advantage VT Large Company Core Fund and the Wells Fargo Advantage VT Core Equity Fund may invest at least 80% of their net assets in the equity securities of large-capitalization companies. However, the Wells Fargo Advantage VT Large Company Core Fund defines large capitalization companies as those with market capitalizations of $3 billion or more and the Wells Fargo Advantage VT Core Equity Fund defines term as those with market capitalizations within the range of the Russell 1000 Index. As of December 31, 2009, the Russell 1000 Index had a market capitalization range of approximately $263 million to $324 billion. The Board also considered that Wells Fargo Advantage VT Large Company Core Fund could invest up to 25% of its total assets in foreign securities whereas the Wells Fargo Advantage VT Core Equity Fund is limited to investing up to 20% of its total assets in foreign securities. Apart from these factors, the Board also noted that the Merger would result in a lower total and the same net operating expense ratio for Wells Fargo Advantage VT Large Company Growth Fund shareholders. The Board also noted that the Evergreen Target Fund that the Acquiring Fund will most closely resemble has a stronger investment performance record than the Wells Fargo Advantage VT Large Company Core Fund over all periods reviewed.
Agreement and Plan of Reorganization
Each Target Fund will be reorganized into its corresponding Acquiring Fund pursuant to the Plan, a form of which is attached at Exhibit A. The following summary of the Plan is qualified in its entirety by reference to Exhibit A attached hereto.
The Plan provides that the Acquiring Fund will acquire all of the assets of the corresponding Target Fund(s) in exchange for shares of equal value of the Acquiring Fund (measured after the close of business on the business day immediately preceding the Merger) and the assumption by the Acquiring Fund of all of the liabilities of the Target Fund(s), at 9:00 a.m. on a particular Merger date (the "Effective Time").
The number of full and fractional shares of each class of an Acquiring Fund to be received by each class of its corresponding Target Fund will be determined by dividing the value of assets net of liabilities attributable to such Target Fund class by the net asset value ("NAV") of one share of the applicable Acquiring Fund class. The Plan specifies that the method of determining the value of the assets net liabilities and the NAV of each class of the Acquiring Fund shall be the same method used in determining the NAV of the Acquiring Fund in the ordinary course. The valuation will be conducted on the business day immediately preceding the Effective Time or upon such other date as the parties may agree, as of the last time that the Acquiring Fund ordinarily calculates its NAV, or as of such other time as the parties may agree (the "Valuation Date").
At the Effective Time or as soon as reasonably practicable thereafter, the Target Fund will liquidate and distribute pro rata to the Target Fund shareholders of record of each class as of the close of business on the Valuation Date the full and fractional shares of the corresponding class of the Acquiring Fund received by the Target Fund based on the shares of the Target Fund class owned by such shareholders. After these distributions and the winding up of its affairs, the Target Fund will be terminated as a series of its applicable Trust in accordance with applicable law and its Declaration of Trust.
A majority of the applicable Board of Trustees may terminate the Plan on behalf of any Target Fund or Acquiring Fund under certain circumstances. In addition completion of a Merger is subject to numerous conditions set forth in the particular Plan, including approval by Target Fund shareholders, the accuracy of various representations and warranties, and receipt of a tax opinion generally to the effect that the Merger will qualify as a "reorganization" for U.S. federal income tax purposes. The Plan also contemplates that the Board of the Acquiring Trust take all actions necessary or appropriate to appoint and constitute two current Trustees of the Evergreen Target Trust as members of the Acquiring Trust's Board. Also, the Plan contemplates that an Advisory Committee be established in accordance with the "Charter of the Advisory Committee of the Trustees of the Legacy Evergreen Funds" that would initially be comprised of the current Trustees of the Evergreen Target Trust ("Evergreen Trustees") who are not appointed to the Acquiring Trust's Board and that a special letter agreement of Funds Management providing, among other things, for Funds Management to compensate Advisory Committee members be in full force and effect. The amount of such compensation will be comparable to the annual retainer amount each current Evergreen Trustee earns as Trustee of such Evergreen Trust, but will in no case be more than the total compensation such Trustee earns for his or her service as Evergreen Trustee. Another condition of the Evergreen Target Trust's obligations under the Plan is that satisfactory arrangements regarding the indemnification of the Evergreen Trustees be entered into. Pursuant to these arrangements, Funds Management is expected to provide operational and financial assurances in respect of liabilities the former Evergreen Trustees may incur in the future relating to their past service as Trustees to the Evergreen Target Trust.
Whether or not the Merger is consummated, Funds Management, EIMC or one of their affiliates will pay all expenses incurred by the Target Fund and Acquiring Fund in connection with the Merger (including the cost of any proxy solicitor). No portion of the expenses incurred in connection with the Merger, except portfolio transaction costs incurred in purchasing or disposing of securities, will be borne directly or indirectly by the Target Fund or Acquiring Fund or their respective shareholders. If a Target Fund's shareholders do not approve the Merger, the Board of Trustees of the Target Trust may consider other possible courses of action in the best interests of the Target Fund and its shareholders.
Information concerning the pro forma capitalization of each Fund is contained in Exhibit D to this prospectus/proxy statement.
Material U.S. Federal Income Tax Consequencesof the Mergers
The following discussion summarizes certain material U.S. federal income tax consequences of your Merger, including an investment in Acquiring Fund shares, that are applicable to you as a Target Fund shareholder. It is based on the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), applicable U.S. Treasury regulations, judicial authority and administrative rulings and practice, all as of the date of this prospectus/proxy statement and all of which are subject to change, including changes with retroactive effect. The discussion below does not address any state, local or foreign tax consequences of the Mergers or of holding Acquiring Fund shares. Your tax treatment may vary depending upon your particular situation. You also may be subject to special rules not discussed below if you are a certain kind of Target Fund shareholder, including, but not limited to: an insurance company; a tax-exempt organization; a financial institution or broker-dealer; a person who is neither a citizen nor resident of the United States or entity that is not organized under the laws of the United States or political subdivision thereof; a shareholder who holds Target Fund shares as part of a hedge, straddle or conversion transaction; a person that does not hold Target Fund shares as a capital asset at the time of the Mergers; or an entity taxable as a partnership for U.S. federal income tax purposes.
We have not requested and will not request an advance ruling from the Internal Revenue Service ("IRS") as to the U.S. federal income tax consequences of the Mergers or any related transaction. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. You are urged to consult with your own tax advisers and financial planners as to the particular tax consequences of your Merger and of holding Acquiring Fund shares to you, including the applicability and effect of any state, local or foreign laws and the effect of possible changes in applicable tax laws.
Qualification of the Mergers as Tax-Free "Reorganizations" Under the Internal Revenue Code
The obligation of the Funds to consummate the Mergers is contingent upon their receipt of an opinion from Proskauer Rose LLP, special tax counsel to the Acquiring Funds, generally to the effect that each Merger will qualify as a "reorganization" under Section 368(a) of the Internal Revenue Code with respect to each Acquiring Fund and its corresponding Target Fund(s), and therefore generally:
no gain or loss will be recognized by the Acquiring Fund upon receipt of the corresponding Target Fund's assets in exchange for the Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Target Fund;
the Acquiring Fund's tax basis in the assets of the corresponding Target Fund transferred to the Acquiring Fund in the Merger will be the same as the Target Fund's tax basis in the assets immediately prior to the transfer;
the Acquiring Fund's holding periods for the assets of the corresponding Target Fund will include the periods during which such assets were held by the Target Fund;
no gain or loss will be recognized by the Target Fund upon the transfer of the Target Fund's assets to the Acquiring Fund in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the Target Fund, or upon distribution of Acquiring Fund shares by the Target Fund to its shareholders in liquidation;
no gain or loss will be recognized by the Target Fund's shareholders upon the exchange of their Target Fund shares for Acquiring Fund shares;
the tax basis of Acquiring Fund shares a Target Fund shareholder receives in connection with the Merger will be the same as the tax basis of his or her Target Fund shares exchanged therefor;
a Target Fund shareholder's holding period for his or her Acquiring Fund shares will include the period for which he or she held the Target Fund shares exchanged therefor; and
the Acquiring Fund will succeed to, and take into account the items of the Target Fund described in Section 381(c) of the Internal Revenue Code, subject to the conditions and limitations specified in the Internal Revenue Code and the U.S. Treasury regulations thereunder.
The tax opinion described above will be based on then-existing law, will be subject to certain assumptions, qualifications and exclusions and will be based in part on the truth and accuracy of certain representations by us on behalf of the Acquiring Funds and the Target Funds. If you hold Target Fund shares through an insurance company separate account, you should not be affected even if your Merger does not qualify as a "reorganization" as described above.
Status as a Regulated Investment Company
Since its formation, each Fund , other than the Shell Funds, has elected and believes it has qualified to be treated as a separate "regulated investment company," or "RIC," under Subchapter M of the Internal Revenue Code and each Shell Fund intends to qualify to be treated as a RIC. Accordingly, each Fund, other than the Shell Funds, believes that it has been, and expects to continue to be, and each Shell Fund expects to be, relieved of U.S. federal income tax liability to the extent that it makes distributions of its income and gains to its shareholders.
U.S. Federal Income Taxation of an Investment in an Acquiring Fund
The following discussion summarizes certain material U.S. federal income tax consequences of an investment in an Acquiring Fund. This discussion is not intended as a substitute for careful tax planning. You should consult your tax adviser about your specific tax situation. Please see the prospectuses and statements of additional information for the Acquiring Funds (or, in the case of the Shell Funds, this prospectus/proxy statement and the Merger SAI) for additional U.S. federal income tax information.
Qualification as a Regulated Investment Company. It is intended that each Acquiring Fund will qualify as a RIC under Subchapter M of Subtitle A, Chapter 1 of the Internal Revenue Code. Each Acquiring Fund will be treated as a separate entity for U.S. federal income tax purposes. Thus, the provisions of the Internal Revenue Code applicable to RICs generally will apply separately to each Acquiring Fund even though each Acquiring Fund is a series of the Acquiring Trust. Furthermore, each Acquiring Fund will separately determine its income, gains, losses and expenses for U.S. federal income tax purposes.
In order to qualify as a RIC under the Internal Revenue Code, each Acquiring Fund must, among other things, derive at least 90% of its gross income each taxable year generally from (i) dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and other income attributable to its business of investing in such stock, securities or foreign currencies (including, but not limited to, gains from options, futures or forward contracts) and (ii) net income derived from an interest in a qualified publicly traded partnership, as defined in the Internal Revenue Code. Future U.S. Treasury regulations may (possibly retroactively) exclude from qualifying income foreign currency gains that are not directly related to an Acquiring Fund's principal business of investing in stock, securities or options and futures with respect to stock or securities. In general, for purposes of this 90% gross income requirement, income derived from a partnership, except a qualified publicly traded partnership, will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized by the RIC.
Each Acquiring Fund must also diversify its holdings so that, at the end of each quarter of an Acquiring Fund's taxable year: (i) at least 50% of the fair market value of its assets consists of (A) cash and cash items (including receivables), U.S. government securities and securities of other RICs, and (B) securities of any one issuer (other than those described in clause (A)) to the extent such securities do not exceed 5% of the value of the Acquiring Fund's total assets and do not exceed 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Acquiring Fund's total assets consists of the securities of any one issuer (other than those described in clause (i)(A)), the securities of two or more issuers the Acquiring Fund controls and which are engaged in the same, similar or related trades or businesses, or the securities of one or more qualified publicly traded partnerships. In addition, for purposes of meeting this diversification requirement, the term "outstanding voting securities of such issuer" includes the equity securities of a qualified publicly traded partnership. The qualifying income and diversification requirements applicable to an Acquiring Fund may limit the extent to which it can engage in transactions in options, futures contracts, forward contracts and swap agreements.
In addition, with respect to each taxable year, each Acquiring Fund generally must distribute to its shareholders at least 90% of its investment company taxable income, which generally includes its ordinary income and the excess of any net short-term capital gain over net long-term capital loss, and at least 90% of its net tax-exempt interest income earned for the taxable year. If an Acquiring Fund meets all of the RIC requirements, it generally will not be subject to U.S. federal income tax on any of the investment company taxable income and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) it distributes to its shareholders. For this purpose, an Acquiring Fund generally must make the distributions in the same year that it realizes the income and gain, although in certain circumstances, an Acquiring Fund may make the distributions in the following taxable year. Shareholders generally are taxed on any distributions from an Acquiring Fund in the year they are actually distributed. However, if an Acquiring Fund declares a distribution to shareholders of record in October, November or December of one year and pays the distribution by January 31 of the following year, the Acquiring Fund and its shareholders will be treated as if the Acquiring Fund paid the distribution by December 31 of the first taxable year. Each Acquiring Fund intends to distribute its net income and gain in a timely manner to maintain its status as a RIC and eliminate fund-level U.S. federal income taxation of such income and gain. However, no assurance can be given that an Acquiring Fund will not be subject to U.S. federal income taxation.
Moreover, the Acquiring Funds may retain for investment all or a portion of their net capital gain. If an Acquiring Fund retains any net capital gain, it will be subject to a tax at regular corporate rates on the amount retained, but may designate the retained amount as undistributed capital gain in a notice to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long- term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the Acquiring Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such liabilities. For U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of an Acquiring Fund will be increased by an amount equal to the difference between the amount of undistributed capital gain included in the shareholder's gross income and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. An Acquiring Fund is not required to, and there can be no assurance that it will, make this designation if it retains all or a portion of its net capital gain in a taxable year.
If, for any taxable year, an Acquiring Fund fails to qualify as a RIC under the Internal Revenue Code, it will be taxed in the same manner as an ordinary corporation without any deduction for its distributions to shareholders, and all distributions from such Acquiring Fund's current and accumulated earnings and profits (including any distributions of its net tax-exempt income and net long-term capital gain) to its shareholders will be taxable as dividend income. To re-qualify to be taxed as a RIC in a subsequent year, an Acquiring Fund may be required to distribute to its shareholders its earnings and profits attributable to non-RIC years reduced by an interest charge on 50% of such earnings and profits payable by the Acquiring Fund to the IRS. In addition, if an Acquiring Fund initially qualifies as a RIC but subsequently fails to qualify as a RIC for a period greater than two taxable years, the Acquiring Fund generally will be required to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the Acquiring Fund had been liquidated) or, alternatively, to be subject to tax on such built-in gain recognized for a period of ten years, in order to re-qualify as a RIC in a subsequent year.
Excise Tax. If an Acquiring Fund fails to distribute by December 31 of each calendar year at least the sum of 98% of its ordinary income for that year (excluding capital gains and losses), 98% of its capital gain net income (adjusted for certain net ordinary losses) for the 12-month period ending on October 31 of that year, and any of its ordinary income and capital gain net income from previous years that was not distributed during such years, the Acquiring Fund will be subject to a nondeductible 4% U.S. federal excise tax on the undistributed amounts (other than to the extent of its tax-exempt interest income, if any). For these purposes, an Acquiring Fund will be treated as having distributed any amount on which it is subject to corporate-level U.S. federal income tax for the taxable year ending within the calendar year. The Acquiring Funds generally intend to actually distribute or be deemed to have distributed substantially all of their ordinary income and capital gain net income, if any, by the end of each calendar year and thus expect not to be subject to the excise tax. However, no assurance can be given that an Acquiring Fund will not be subject to the excise tax. Moreover, the Acquiring Funds reserve the right to pay an excise tax rather than make an additional distribution when circumstances warrant (for example, the amount of excise tax to be paid by an Acquiring Fund is determined to be de minimis).
Equalization Accounting. An Acquiring Fund may use the so-called "equalization method" of accounting to allocate a portion of its "earnings and profits," which generally equals the Acquiring Fund's undistributed investment company taxable income and net capital gain, with certain adjustments, to redemption proceeds. This method permits an Acquiring Fund to achieve more balanced distributions for both continuing and redeeming shareholders. Although using this method generally will not affect an Acquiring Fund's total returns, it may reduce the amount that an Acquiring Fund would otherwise distribute to continuing shareholders by reducing the effect of redemptions of Acquiring Fund shares on Acquiring Fund distributions to shareholders. However, the IRS may not have expressly sanctioned the particular equalization methods used by the Acquiring Funds, and thus the Acquiring Funds' use of these methods may be subject to IRS scrutiny.
Taxation of Acquiring Fund Investments. If you hold Acquiring Fund shares through an insurance company separate account, you should generally not be affected by the character of the Acquiring Fund's investments.
"Passive foreign investment companies" ("PFICs") are generally defined as foreign corporations with respect to which at least 75% of their gross income for their taxable year is income from passive sources (such as interest, dividends, certain rents and royalties, or capital gains) or at least 50% of their assets on average produce such passive income. If an Acquiring Fund acquires any equity interest in a PFIC, the Acquiring Fund could be subject to U.S. federal income tax and interest charges on "excess distributions" received from the PFIC or on gain from the sale of such equity interest in the PFIC, even if all income or gain actually received by the Acquiring Fund is timely distributed to its shareholders.
Elections may be available that would ameliorate these adverse tax consequences, but such elections could require an Acquiring Fund to recognize taxable income or gain without the concurrent receipt of cash. The Acquiring Funds may attempt to limit and/or manage their holdings in PFICs to minimize their tax liability or maximize their returns from these investments but there can be no assurance that they will be able to do so. Moreover, because it is not always possible to identify a foreign corporation as a PFIC in advance of acquiring shares in the corporation, an Acquiring Fund may incur the tax and interest charges described above in some instances.
Some regulated futures contracts, certain foreign currency contracts, and non-equity, listed options used by the Acquiring Funds will be deemed "Section 1256 contracts." An Acquiring Fund will be required to "mark to market" any such contracts held at the end of the taxable year by treating them as if they had been sold on the last day of that year at market value. Sixty percent of any net gain or loss realized on all dispositions of Section 1256 contracts, including deemed dispositions under the "mark-to-market" rule, generally will be treated as long-term capital gain or loss, and the remaining 40% will be treated as short-term capital gain or loss, although certain foreign currency gains and losses from such contracts may be treated as ordinary income or loss. These provisions may require an Acquiring Fund to recognize income or gains without a concurrent receipt of cash. Transactions that qualify as designated hedges are exempt from the mark-to-market rule and the "60%/40%" rule and may require an Acquiring Fund to defer the recognition of losses on certain futures contracts, foreign currency contracts and non-equity options.
Taxation of a Separate Account of a Participating Insurance Company. Under the Internal Revenue Code, if the investments of a segregated asset account, such as the separate accounts of participating insurance companies, are "adequately diversified," a holder of a variable annuity contract or variable life insurance policy supported by the account will receive favorable tax treatment in the form of tax deferral.
In general, pursuant to the U.S. Treasury regulations promulgated under Section 817(h) of the Internal Revenue Code, the investments of a segregated asset account are considered to be "adequately diversified" only if: (i) no more than 55% of the value of the total assets of the account is represented by any one investment; (ii) no more than 70% of the value of the total assets of the account is represented by any two investments; (iii) no more than 80% of the value of the total assets of the account is represented by any three investments; and (iv) no more than 90% of the value of the total assets of the account is represented by any four investments. Section 817(h) provides as a safe harbor that a segregated asset account is also considered to be "adequately diversified" if it meets the RIC diversification tests described earlier and no more than 55% of the value of the total assets of the account is attributable to cash, cash items (including receivables), U.S. government securities, and securities of other RICs.
In general, all securities of the same issuer are treated as a single investment for such purposes, and each U.S. government agency and instrumentality is considered a separate issuer. However, U.S. Treasury regulations provide a "look-through rule" with respect to a segregated asset account's investments in a RIC for purposes of the applicable diversification requirements, provided certain conditions are satisfied by the RIC. In particular, (i) if the beneficial interests in the RIC are held by one or more segregated asset accounts of one or more insurance companies, and (ii) if public access to such RIC is available exclusively through the purchase of a variable annuity contract or variable life insurance policy or through certain qualified pension or retirement plans, then a segregated asset account's beneficial interest in the RIC is not treated as a single investment. Instead, a pro rata portion of each asset of the RIC is treated as an asset of the segregated asset account. Look-through treatment is also available if the two requirements above are met, notwithstanding the fact that beneficial interests in the RIC are also held by certain other permitted investors, including certain pension or retirement plans, certain qualified tuition programs, or certain Puerto Rican segregated asset accounts.
Failure by an Acquiring Fund to satisfy the Section 817(h) requirements could cause the variable annuity contracts and variable life insurance policies to lose their favorable tax status and require a contract holder to include in ordinary income any income accrued under the contracts for the current and all prior taxable years. Under certain circumstances described in the applicable U.S. Treasury regulations, inadvertent failure to satisfy the applicable diversification requirements may be corrected, but such a correction would require a payment to the IRS based on the tax contract holders would have incurred if they were treated as receiving the income on the contract for the period during which the diversification requirements were not satisfied. Any such failure may also result in adverse U.S. federal income tax consequences for the insurance company issuing the contracts.
As indicated above, the Trust intends that each Acquiring Fund will continue to qualify as a RIC under the Internal Revenue Code. The Trust also intends to cause each Acquiring Fund to continue to satisfy the separate requirements imposed by Section 817(h) of the Internal Revenue Code and the regulations thereunder at all times to enable the corresponding separate accounts to be "adequately diversified." Accordingly, the Trust intends that each participating insurance company, through its separate accounts, will be able to treat its interests in an Acquiring Fund as ownership of a pro rata portion of each asset of the Acquiring Fund, so that individual holders of the variable annuity contracts or variable life insurance policies underlying the separate account will qualify for favorable federal income tax treatment under the Internal Revenue Code. However, no assurance can be made in that regard.
The IRS or Treasury Department may issue additional rulings or regulations that will address the circumstances in which a variable annuity contract or variable life insurance policy holder's control of the investments of a separate account may cause such holder, rather than the insurance company, to be treated as the owner of the assets of a separate account. If the holder is considered the owner of the securities underlying the separate account, income and gain produced by those securities would be included currently in the holder's gross income. It is not known what standards will be set forth in the regulations or rulings or whether any such standards will apply retroactively. In the event that rulings or regulations are issued, there can be no assurance that the Acquiring Funds will be able to operate as currently described, or that the Trust will not have to change one or more Acquiring Fund's investment objective or substitute the shares of one Acquiring Fund for those of another.
Tax Shelter Reporting Regulations. Generally, under U.S. Treasury regulations, if an individual shareholder recognizes a loss of $2 million or more or if a corporate shareholder recognizes a loss of $10 million or more, the shareholder must file with the IRS a disclosure statement on Form 8886. Direct shareholders of securities are in many cases exempt from this reporting requirement, but under current guidance, shareholders of a RIC are not exempt. Future guidance may extend the current exemption from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Shareholders should consult their own tax advisers to determine the applicability of these regulations in light of their individual circumstances.
General Tax Consequences to Holders of Variable Annuity Contracts or Variable Life Insurance Policies. For information concerning the U.S. federal income tax consequences to the holders of variable annuity contracts or variable life insurance policies, such holders should consult the prospectuses and other materials used in connection with the issuance of their particular contracts or policies. Variable annuity contracts or variable life insurance policies purchased through insurance company separate accounts should provide for the accumulation of all earnings from interest, dividends and capital appreciation without current federal income tax liability to the contract or policy holder. Depending on the variable annuity contract or variable life insurance policy, distributions from the contract or policy may be subject to ordinary income tax and, in addition, a 10% penalty tax on distributions before age 59%. Only the portion of a distribution attributable to income on the investment in the contract is subject to federal income tax. Contract or policy holders should consult with competent tax advisors for a more complete discussion of possible tax consequences in a particular situation.
Buying, Selling and Exchanging Fund Shares
Purchase and Redemption Procedures -- Evergreen VA Funds
With respect to the Evergreen Variable Annuity Funds (the "Evergreen VA Funds"), shares of an Evergreen Fund may not be purchased or redeemed directly, but only through Variable Contracts offered through separate accounts of participating insurance companies. Please refer to the prospectus of the Variable Contracts for information on how to purchase such contracts or policies, how to select specific Evergreen VA Funds as investment options for the contracts or policies, how to redeem funds or change investment options and any fees associated with a purchase or redemption.
The separate accounts of the participating insurance companies place orders to purchase and redeem shares of an Evergreen VA Fund based on, among other things, the amount of premium payments to be invested and the amount of surrender and transfer requests to be effected on that day pursuant to the variable annuity contracts or variable life insurance policies.
The Evergreen VA Funds have approved the acceptance of purchase and redemption request orders effective as of the time of their receipt by certain authorized financial intermediaries or their designees as long as these orders are received by these entities prior to the time that a Fund calculates its NAV. These financial service firms may charge transaction fees.
Timing of Proceeds. Normally, we will send your redemption proceeds on the next business day after we receive a request; however, we may take up to seven business days before sending redemption proceeds.
Purchase and Redemption Procedures -- Wells Fargo VT Funds
Shares of the Wells Fargo Variable Trust ("WFVT") are not offered directly to the general public. WFVT currently offers the Wells Fargo Advantage VT Funds (the "Wells Fargo VT Funds") shares to separate accounts of various life insurance companies as funding vehicles for certain Variable Contracts issued through the separate accounts by such life insurance companies. Many of the separate accounts are registered as investment companies with the Securities and Exchange Commission. When shares of Wells Fargo VT Funds are offered as a funding vehicle for Variable Contracts issued through such a separate account, a separate prospectus describing the separate account and the Variable Contracts being offered through it will accompany the Wells Fargo VT Fund prospectus. When WFVT offers Fund shares as funding vehicles for Variable Contracts issued through a separate account that is not registered as an investment company, a separate disclosure document (rather than a prospectus) describing the separate account and the Variable Contracts being offered through it will accompany the Wells Fargo VT Fund prospectus. In the future, WFVT may offer its Fund shares directly to qualified pension and retirement plans.
WFVT has entered into an agreement with the life insurance company sponsor of each separate account (a participation agreement) setting forth the terms and conditions pursuant to which the insurer will purchase and redeem shares of the Funds. In the event that WFVT offers shares of one or more Funds to a qualified pension or retirement plan, it likely will enter into a similar participation agreement. The discussion that follows reflects the terms of WFVT's current participation agreements (which do not differ materially from one another).
Shares of the Funds are sold in a continuous offering to the separate accounts to support the Variable Contracts. Net purchase payments under the Variable Contracts are placed in one or more sub-accounts of the separate accounts and the assets of each such sub-account are invested in the shares of the Fund corresponding to that sub-account. The separate accounts purchase and redeem shares of the Funds for their sub-accounts at each share's NAV without sales or redemption charges.
For each day on which a Fund's net asset value is calculated, the separate accounts transmit to WFVT any orders to purchase or redeem shares of the Fund based on the net purchase payments, redemption (surrender) requests, and transfer requests from Variable Contract owners that have been processed on that day. The separate account purchases and redeems shares of each Fund at the Fund's NAV per share calculated as of that day (i.e., the day the separate account processes contract owner transactions), although such purchases and redemptions may be executed the next morning. Payment for shares redeemed is made within seven days after receipt of a proper redemption order, except that the right of redemption may be suspended or payments postponed when permitted by applicable laws and regulations.
Share Class Information
The following is a summary description of the charges and fees applicable to the various classes of the Target and Acquiring Funds. More detailed descriptions of the distribution arrangements applicable to the classes of shares are contained in each Fund's prospectus and statement of additional information (or in the case of the Shell Funds, Exhibit E to this prospectus/proxy statement and the Merger SAI).
With respect to Class 2 shares, the Evergreen VA Funds and the Wells Fargo VT Funds have each adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act for each Fund. The Plan authorizes the payment of all or part of the cost of preparing and distributing prospectuses, annual and semi-annual reports, and other materials to prospective beneficial owners of each Fund's shares, and the payment of compensation to Participating Insurance Companies. For these services, each Fund pays an annual fee of up to 0.25% of its average daily net assets. These fees are paid out of each Fund's assets on an ongoing basis. Over time, these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Class 1 shares of Evergreen VA Funds and Wells Fargo VT Funds do not pay a 12b-1 fee.
Financial Intermediary Compensation
If you purchase a Target Fund or an Acquiring Fund through a broker-dealer or other financial intermediary, the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial adviser to recommend the Fund over another investment. Ask your financial adviser or visit your financial intermediary's website for more information.
Fund Policies and Procedures
Short-Term Trading Policy
The Evergreen VA funds' short-term trading policy is substantially similar to that of Wells Fargo VT Funds, which is set forth below. The Evergreen VA funds' policy is described in the Target Funds' prospectuses and statement of additional information.
Excessive trading by Wells Fargo VT Fund shareholders can negatively impact a Wells Fargo VT Fund and its long-term shareholders in several ways, including by disrupting Wells Fargo VT Fund investment strategies, increasing transaction costs, decreasing tax efficiency and diluting the value of shares held by long-term shareholders. Excessive trading in Wells Fargo VT Fund shares can negatively impact a Wells Fargo VT Fund's long-term performance by requiring it to maintain more assets in cash or to liquidate portfolio holdings at a disadvantageous time. Certain Wells Fargo VT Funds may be more susceptible than others to these negative effects. For example, Wells Fargo VT Funds that have a greater percentage of their investments in non-U.S. securities may be more susceptible than other Wells Fargo VT Funds to arbitrage opportunities resulting from pricing variations due to time zone differences across international financial markets. Similarly, Wells Fargo VT Funds that have a greater percentage of their investments in small company securities may be more susceptible than other Wells Fargo VT Funds to arbitrage opportunities due to the less liquid nature of small company securities. Both types of Wells Fargo VT Funds also may incur higher transaction costs in liquidating portfolio holdings to meet excessive redemption levels. Fair value pricing may reduce these arbitrage opportunities, thereby reducing excessive trading risks.
The Wells Fargo VT Funds actively discourage and take steps to prevent the portfolio disruption and negative effects on long-term shareholders that can result from excessive trading activity by Wells Fargo VT Fund shareholders. The Board has approved the Wells Fargo VT Funds' policies and procedures, which provide, among other things, that Funds Management may deem trading activity to be excessive if it determines that such trading activity would likely be disruptive to a Wells Fargo VT Fund by increasing expenses or lowering returns. In this regard, Funds Management takes steps to avoid accommodating frequent purchases and redemptions of shares by contract owners. Funds Management monitors available contract owner trading information across all Wells Fargo VT Funds on a daily basis. Funds Management will temporarily suspend the purchase and exchange privileges of a contract owner who completes a purchase and redemption in a Wells Fargo VT Fund within 30 calendar days. Such contract owner will be precluded from investing in the Wells Fargo VT Fund for a period of 30 calendar days.
Excessive trading may give rise to conflicts of interest between owners of different types of variable contracts and/or owners of variable contracts issued by different insurance companies that offer the Wells Fargo VT Funds as investment options under their contracts.
An insurance company sponsor through whom variable contract owners may purchase shares of a Wells Fargo VT Fund may independently attempt to identify excessive trading and take steps to deter such activity. As a result, an insurance company may on its own limit or permit trading activity of its variable contract owners that invest in shares using standards different from the standards used by the Wells Fargo VT Fund and discussed above. A Wells Fargo VT Fund may permit an insurance company to enforce its own internal policies and procedures concerning frequent trading in instances where the Wells Fargo VT Fund reasonably believes that the company's policies and procedures effectively discourage disruptive trading activity. If a variable contract owner purchases shares through an insurance company sponsor, it should contact the company for more information about whether and how restrictions or limitations on trading activity will be applied to the separate account.
Dividend Policy
With respect to the Evergreen VA Funds and the Wells Fargo VT Funds, each Fund is treated separately in determining the amounts of distributions of any net investment income and realized net capital gains payable to its shareholders. A distribution is automatically reinvested on the payment date in additional Fund shares at NAV or paid in cash at the election of the Participating Insurance Company.
The Target and Acquiring Funds each distribute their net income and their net realized gains with the frequency set forth in the table below.
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA Core Bond Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Total Return Bond Fund | Monthly Monthly | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA Omega Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Large Company Growth Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Omega Growth Fund | Annually Annually | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA Fundamental Large Cap Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Large Company Core Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Core Equity Fund | Annually Annually | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA Special Values Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Small/Mid Cap Value Fund | Annually Annually | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA Growth Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT Small Cap Growth Fund | Annually Annually | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Evergreen VA International Equity Fund | Annually Annually | Annually Annually | ||
Wells Fargo Advantage VT International Core Fund | Annually Annually | Annually Annually |
Fund | Frequency of Investment Company | Frequency of Net Realized | ||
Wells Fargo Advantage VT Equity Income Fund | Quarterly Quarterly | Annually Annually | ||
Wells Fargo Advantage VT C&B Large Cap Value Fund | Quarterly Quarterly | Annually Annually | ||
Wells Fargo Advantage VT Intrinsic Value Fund | Annually Annually | Annually Annually |
Pricing Fund Shares
The following describes how Wells Fargo Advantage Funds price their shares. The Evergreen funds follow similar procedures. See each Fund's prospectus and SAI (or in the case of the Shell Funds, Exhibit E to this prospectus/proxy statement and the Merger SAI) for further information about the pricing of shares.
The share price (net asset value per share or NAV) for the Fund is calculated each business day as of the close of trading on the New York Stock Exchange (NYSE) (generally 4 p.m. ET). To calculate a share's NAV, the Fund's assets are valued and totaled, liabilities are subtracted, and the balance, called net assets, is divided by the number of shares outstanding. The NAV of each share class is calculated separately. The price at which a purchase or redemption of Fund shares is effected is based on the next calculation of NAV after the order is placed. A Fund does not calculate its NAV on days the NYSE is closed for trading, which include New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
With respect to any portion of a Fund's assets that may be invested in other mutual funds, the Fund's NAV is calculated based upon the reported net asset values of the other mutual funds in which the Fund invests, and the prospectuses for those companies explain the circumstances under which those companies will use fair value pricing and the effects of using fair value pricing.
With respect to any portion of a Fund's assets invested directly in securities, the Fund's investments are generally valued at current market prices. Securities are generally valued based on the last sale price during the regular trading session if the security trades on an exchange (closing price). Securities that are not traded primarily on an exchange generally are valued using latest quoted bid prices obtained by an independent pricing service. Securities listed on the Nasdaq Stock Market, Inc., however, are valued at the Nasdaq Official Closing Price (NOCP), and if no NOCP is available, then at the last reported sales price.
We are required to depart from these general valuation methods and use fair value pricing methods to determine the values of certain investments if we believe that the closing price or the latest quoted bid price of a security, including securities that trade primarily on a foreign exchange, does not accurately reflect its current value when the Fund calculates its NAV. In addition, we use fair value pricing to determine the value of investments in securities and other assets, including illiquid securities, for which current market quotations are not readily available. The closing price or the latest quoted bid price of a security may not reflect its current value if, among other things, a significant event occurs after the closing price or latest quoted bid price is established but before a Fund calculates its NAV that materially affects the value of the security. We use various criteria, including a systematic evaluation of U.S. market moves after the close of foreign markets, in deciding whether a foreign security's market price is still reliable and, if not, what fair market value to assign to the security.
In light of the judgment involved in fair value decisions, there can be no assurance that a fair value assigned to a particular security is accurate or that it reflects the price that the Fund could obtain for such security if it were to sell the security as of the time of fair value pricing. Such fair value pricing may result in NAVs that are higher or lower than NAVs based on the closing price or latest quoted bid price.
INFORMATION ON SHAREHOLDERS' RIGHTS
Form of Organization
The Target and Acquiring Funds are series of the corresponding Target and Acquiring Trusts, respectively, as identified above. The Trusts are open-end management investment companies registered with the SEC under the 1940 Act, which continuously offer shares to the public. Each Trust is organized as a Delaware statutory trust and is governed by its respective Amended and Restated Declaration of Trust (each referred to hereinafter as a "Declaration of Trust"), its Amended and Restated By-Laws, with respect to an Evergreen Target Trust only (each referred to hereinafter as "By-Laws"), and applicable state and federal law.
Capitalization
The beneficial interests in the Acquiring and Target Funds are represented by an unlimited number of transferable shares of beneficial interest. Each Fund's governing documents permit the Trustees to allocate shares into an unlimited number of series, and classes thereof, with rights determined by the Trustees, all without shareholder approval. Fractional shares may be issued by either Fund. Each Fund's shares represent equal proportionate interests in the assets belonging to the shares of the same class of that Fund. Except as otherwise required by the 1940 Act or other applicable law, shareholders of each Fund are entitled to receive dividends and other amounts as determined by the Trustees. Shareholders of each Fund vote separately, by class, as to matters that affect only their particular class and, by Fund, as to matters, such as approval of or amendments to investment advisory agreements or proposed mergers, that affect only their particular Fund.
Shareholder Liability
Under Delaware law, shareholders of a Delaware statutory trust are entitled to the same limitation of personal liability extended to stockholders of Delaware corporations. Other than in a limited number of states, no such similar statutory or other authority limiting business trust shareholder liability exists. As a result, to the extent that the Trusts or shareholders of the Trusts are subject to the jurisdiction of a court that does not apply Delaware law, shareholders of the relevant Trust may be subject to liability. To guard against this risk, each Declaration of Trust (a) provides that any written obligation of such Trust may contain a statement that such obligation may only be enforced against the assets of the relevant Trust or the particular series in question and the obligation is not binding upon the shareholders of the relevant Trust; however, the omission of such a disclaimer will not operate to create personal liability for any shareholder; and (b) provides for indemnification out of Trust property of any shareholder held personally liable for the obligations of the relevant Trust. Accordingly, the risk of a shareholder of a Trust incurring financial loss beyond that shareholder's investment because of shareholder liability should be limited to circumstances in which: (i) the court refuses to apply Delaware law; (ii) no contractual limitation of liability was in effect; and (iii) the relevant Trust itself is unable to meet its obligations.
Shareholder Meeting and Voting Rights
The Trusts are not required to hold annual meetings of shareholders and do not currently intend to hold regular shareholder meetings. With respect to each Trust, a meeting of shareholders for the purpose of voting upon the question of removal of a Trustee must be called when requested in writing by the holder(s) of at least 10% of the outstanding shares of the relevant Trust. With respect to the Evergreen Trust, any Trustee may be removed by action of at least 2/3 of the outstanding shares. With respect to the Wells Fargo Funds Trust, any Trustee may be removed by action of at least 2/3 of the outstanding shares if required by Section 16(c) of the 1940 Act, as interpreted by the staff of the SEC.
Each Trust is required to call a meeting of shareholders for the purpose of electing Trustees if, at any time, less than a majority of the Trustees then holding office were elected by shareholders. Cumulative voting is not permitted in the election of Trustees. Except when a larger quorum is required by applicable law, 25% of the issued and outstanding shares of an Evergreen Fund, and 33 1/3% of the issued and outstanding shares of a Wells Fargo Target Fund entitled to vote constitutes a quorum for consideration of a matter. For each Fund, when a quorum is present a majority (greater than 50%) of the votes cast is sufficient to act on a matter (unless otherwise specifically required by the applicable governing documents or other law, including the 1940 Act), except that, with respect to an Evergreen Target Trust, a plurality of the shares voted may elect a Trustee.
The Declaration of Trust of the Evergreen Target Trust provides that a shareholder of an Evergreen Target Fund is entitled to one vote for each share and a fractional vote for each fraction of a share, as to any matter on which the share is entitled to vote.
The Declaration of Trust of the Wells Fargo Variable Trust provides that each share is entitled to one vote, and each fractional share to a proportionate fraction of a vote.
Liquidation
In the event of the liquidation of the Acquiring or Target Funds, the shareholders would be entitled to receive, when and as declared by the Trustees, the excess of the assets belonging to such Fund and attributable to the class over the liabilities belonging to the Fund and attributable to the class. In either case, the assets so distributable to shareholders of the Fund will be distributed among the shareholders in proportion to the number of shares of the class of the Fund held by them and recorded on the books of the Fund.
Liability and Indemnification of Trustees
Under the Declaration of Trust for an Evergreen Target Trust, a Trustee is liable to the relevant Target Fund and its shareholders only for such Trustee's own willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office of Trustee or the discharge of such Trustee's functions. As provided in the Declaration of Trust, each Trustee of the relevant Target Trust is entitled to be indemnified against all liabilities against him or her, including the costs of litigation, unless it is determined that the Trustee (i) did not act in good faith in the reasonable belief that such Trustee's action was in or not opposed to the best interests of the relevant Target Fund; (ii) had acted with willful misfeasance, bad faith, gross negligence or reckless disregard of such Trustee's duties; and (iii) in a criminal proceeding, had reasonable cause to believe that such Trustee's conduct was unlawful (collectively, "disabling conduct"). A determination that the Trustee did not engage in disabling conduct and is, therefore, entitled to indemnification may be based upon the outcome of a court action or administrative proceeding or on a reasonable determination based on a review of the facts by (a) a vote of a majority of a quorum of those Trustees who are neither "interested persons" of the Fund (within the meaning of the 1940 Act) nor parties to the proceeding or (b) an independent legal counsel in a written opinion. An Evergreen Target Trust may also advance money for such litigation expenses provided that the Trustee undertakes to repay the relevant Target Fund if his or her conduct is later determined to preclude indemnification and certain other conditions are met.
If a Merger is consummated, the obligations of an Evergreen Target Trust to indemnify a Trustee would be assumed by its corresponding Acquiring Trust. In addition, Funds Management is expected to provide operational and financial assurances in respect of liabilities or expenses the former Evergreen Trustees may incur in the future relating to their past service as Trustees to the Evergreen Target Trust.
Under the Declaration of Trust for the Wells Fargo Variable Trust, all persons contracting with or having any claim against the Trust or a particular series shall look only to the assets of the Trust or such series, respectively, for payment under such contract or claim; and the Trustees shall not be personally liable therefor. No Trustee shall be liable to the Trust or to any shareholder for any loss, damage or claim incurred by reason of any act performed or omitted by such Trustee in good faith on behalf of the Trust, a series or a class, and in a manner reasonably believed to be within the scope of authority conferred on such Trustee by the Declaration of Trust, except that a Trustee shall be liable for any loss, damage or claim incurred by reason of such Trustee's willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. Subject only to the express limitations in the 1940 Act, other applicable laws, and the Declaration of Trust, the Trust or the appropriate series shall indemnify each of its Trustees to the fullest extent permitted under the 1940 Act and other applicable laws. The Wells Fargo Variable Trust may also advance money for such litigation provided that the Trustee undertakes to repay the relevant Fund if his or her conduct is later determined to preclude indemnification and certain other conditions are met.
The foregoing is only a summary of certain characteristics of the operations of each Trust's Declaration of Trust, By-Laws (with respect to an Evergreen Target Trust) and Delaware law and is not a complete description of those documents or law. Shareholders should refer to the provisions of such Declaration of Trust, By-Laws (as applicable) and Delaware law directly for more complete information.
VOTING INFORMATION CONCERNING THE MEETING
Shareholder/Contract Owner Information
This prospectus/proxy statement is being sent to shareholders of your Target Fund and contract owners of Variable Contracts with an interest in the Target Fund in connection with the solicitation of proxies by the Trustees of the Target Fund, to be used at the Meeting to be held at 10:00 a.m., Pacific time, on June 8, 2010 at the offices of Wells Fargo Advantage Funds, 525 Market Street, San Francisco, California, 94105, and at any adjournments thereof. This prospectus/proxy statement, along with a Notice of the Meeting and a proxy card, is first being mailed to shareholders/contract owners of the Target Fund on or about ____, 2010. Only shareholders of record as of the close of business on March 10, 2010 (the "Record Date") are entitled to notice of, and to vote at, the Meeting or any adjournment(s) thereof. Shareholders who intend on attending the Meeting should call [___] to obtain important information regarding attendance at the Meeting, including directions.
As shares of each Target Fund are available only through separate accounts funding variable annuity contracts and variable life insurance policies issued by certain life insurance companies (each, an "Insurance Company" and collectively, the "Insurance Companies"), all shareholders of each Target Fund are the Insurance Companies. Each Insurance Company will vote shares of the Target Fund or Target Funds held by it in accordance with voting instructions received from variable annuity contract and variable life insurance policy owners (collectively, the "Contract Owners") for whose accounts the shares are held. Accordingly, this prospectus/proxy statement is intended to be used by each Insurance Company in obtaining these voting instructions from Contract Owners. In the event that a Contract Owner does not sign or return a voting instructions card specifying a choice, the relevant Insurance Company will vote the shares of the Target Fund attributable to the Contract Owner in the same proportion as shares of that Target Fund for which it has received instructions. One effect of this system of proportional voting is that, if only a small number of Contract Owners provide voting instructions, this small number of Contract Owners may determine the outcome of a vote for a Target Fund.
A Contract Owner can vote by returning his/her properly executed voting instructions card in the envelope provided. When a Contract Owner completes and signs his/her voting instructions card, the applicable Insurance Company will vote on his/her behalf at the Meeting (or any adjournments thereof) exactly as the Contract Owner has indicated. If any other matters are properly presented at the Meeting for action, the persons named as proxies will vote in accordance with the views of management of the Target Funds.
If you are a shareholder, you can vote by returning your properly executed proxy card in the envelope provided. When you complete and sign your proxy card, the proxies named will vote on your behalf at the Meeting (or any adjournments thereof) as you have indicated. If you return a properly executed proxy card, but no choice is specified, your shares will be voted FOR approval of the Plan. If any other matters are properly presented at the Meeting for action, the persons named as proxies will vote in accordance with the views of management of the Target Fund. If any other matters about which the Target Fund did not have timely notice properly come before the meeting, authorization is given to the proxy holders to vote in accordance with the views of management of the Target Fund. Abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum, and will have the effect of a vote against the Plan. Any proposal for which sufficient favorable votes have been received by the time of the Meeting may be acted upon and considered final regardless of whether the Meeting is adjourned to permit additional solicitation with respect to any other proposal. In certain circumstances in which the Target Fund has received sufficient votes to approve a matter being recommended for approval by the Board of Trustees, the Target Fund may request that brokers and nominees, in their discretion, withhold submission of broker non-votes in order to avoid the need for solicitation of additional votes in favor of the proposal. Shares attributable to amounts retained by each Insurance Company will be voted in the same proportion as voting instructions received from Contract Owners. Accordingly, there are not expected to be any broker non-votes.
Shareholders may revoke prior proxy instructions by providing superseding proxy instructions by written notice to that Fund, by submitting a subsequently executed and dated proxy card, by authorizing their proxy by telephone or Internet or by attending the Meeting and casting their vote in person.
If you execute, date and submit a voting instruction card in respect of a Fund, you may revoke that voting instruction or change it by written notice to your insurance company, by submitting a subsequently executed and dated voting instruction card or by submitting your voting instruction by telephone or Internet at a later date. If you submit your voting instruction by telephone or through the Internet, you may revoke it by submitting a subsequent voting instruction by telephone or Internet by completing, signing and returning a voting instruction card dated as of a date that is later than your last telephone or internet voting instruction.
Approval of each Merger requires the affirmative vote of the holders of a "majority of the outstanding voting securities" (as defined in the 1940 Act) of the Target Fund. A vote of the majority of the outstanding voting securities is defined in the 1940 Act as the lesser of (i) 67% or more of the voting securities present at the Meeting, if the holders of more than 50% of the outstanding voting securities of the Target Fund are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Target Fund.
This assumes that a quorum is present at the Meeting (at least 25% of the Fund's issued and outstanding shares for each Target Fund of the Evergreen Variable Annuity Trust and 33 1/3% of the Fund's issued and outstanding shares for each Target Fund of the Wells Fargo Variable Trust). Abstentions will be treated as present for purposes of determining the existence of a quorum, but will not be considered a vote cast. Thus, abstentions will have the same effect as a vote against the Merger.
In voting on the Plan, all classes of each Target Fund will vote together as if they were a single class. Each shareholder of an Evergreen Target Fund will be entitled to one vote for each share, and a fractional vote for each fraction of a share, as to any matter on which the share is entitled to vote. Each whole share of a Wells Fargo Target Fund will be entitled to one vote, and each fractional share will be entitled to a proportionate fractional vote.
Proxy solicitations will be made primarily by mail, but proxy solicitations may also be made by telephone, through the Internet or personal solicitations conducted by officers and employees of EIMC, its affiliates or other representatives of the Target Fund (who will not be paid for their soliciting activities). In addition, The Altman Group, the Fund's proxy solicitor, may make proxy solicitations and will receive compensation for seeking shareholder votes/contract owner instructions and answering shareholder/contract owner questions in an amount estimated to be $5,000. That cost and other expenses of the Meeting and the Merger will be paid by Wells Fargo, EIMC or one of their affiliates.
If the Target Fund shareholders do not vote to approve the Merger, the Trustees may consider other possible courses of action in the best interests of shareholders. In the event a quorum is not present at the Meeting or in the event that a quorum is present but sufficient votes to approve the proposal are not received, the persons named as proxies may propose one or more adjournments of the Meeting to permit further solicitation of proxies. The persons named as proxies will vote in favor of adjournment those proxies that they are entitled to vote in favor of the proposal. They will vote against any such adjournment those proxies required to be voted against the proposal. The Meeting, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares represented at the Meeting, either in person or by proxy; or in his or her discretion by the chair of the Meeting. Abstentions will not be voted on a motion to adjourn. Any proposal for which sufficient favorable votes have been received by the time of the Meeting may be acted upon and considered final regardless of whether the Meeting is adjourned to permit additional solicitation with respect to any other proposal.
A shareholder who objects to the proposed Merger will not be entitled under either Delaware law or a Target Fund's Declaration of Trust to demand payment for, or an appraisal of, his or her shares. However, shareholders/contract owners should be aware that the Merger as proposed is not expected to result in recognition of gain or loss to shareholders/contract owners for U.S. federal income tax purposes and that, if the Merger is consummated, shareholders/contract owners will be free to redeem the shares of the Acquiring Fund which they receive in the transaction at their then-current net asset value, net of any applicable CDSC. Shares of the Target Fund may be redeemed at any time prior to the consummation of the Merger. Shareholders/contract owners of the Target Fund may wish to consult their tax advisors as to any differing consequences of redeeming Fund shares prior to the Merger or exchanging such shares in the Merger.
The votes of the shareholders of the Acquiring Funds are not being solicited by this prospectus/proxy statement and are not required to carry out the Merger.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES. Please advise the Target Fund whether other persons are beneficial owners of shares for which proxies are being solicited and, if so, the number of copies of this prospectus/proxy statement needed to supply copies to the beneficial owners of the respective shares.
For each class of your Target Fund's shares entitled to vote at the meeting, the number of shares outstanding as of the Record Date was as follows:
Classes of Shares | Number of Shares Outstanding and Entitled to Vote | Number of Votes by Class | ||
Target Fund | ||||
Class 1 | ||||
Class 2 | ||||
All Classes |
As of March 10, 2010, the officers and Trustees of your Target Trust owned as a group less than 1% of the outstanding shares of any class of each Fund that is a series of the Trust. Except as noted below in the table, to each Fund's knowledge, no persons owned of record 5% or more of any class of shares of the respective Fund. No person is reflected on the books and records of the Funds as owning beneficially 5% or more of any shares of the Funds as of March 10, 2010. Any shareholder who holds beneficially 25% or more of the outstanding common shares of a Fund may be deemed to control the Fund until such time as it holds beneficially less than 25% of the outstanding common shares of the Fund. Any shareholder controlling a Fund may be able to determine the outcome of issues that are submitted to shareholders for vote, including the vote to approve the Plan, and may be able to take action regarding the Fund without the consent or approval of the other shareholders.
Target Fund | |||||||
Name and Address of Shareholders | Class | Number of | Percentage of Shares of | ||||
___% ___% | |||||||
___% ___% |
Acquiring Fund | |||||||
Name and Address of Shareholders | Class | Number of Shares | Percentage of Shares of Class Before Merger | ||||
___% ___% | |||||||
___% ___% |
FINANCIAL STATEMENTS
The audited financial highlights of each Target Fund and Acquiring Fund (other than the Wells Fargo Advantage VT Omega Growth Fund, Wells Fargo Advantage VT Core Equity Fund and Wells Fargo Advantage VT Intrinsic Value Fund) for the last five fiscal years are incorporated by reference from the applicable Fund's prospectus.
The Merger SAI incorporates by reference the following financial statements, including the financial highlights for the periods indicated therein and, with respect to audited financial statements, the reports of KPMG LLP, independent registered public accounting firm to each of the Target Funds and Acquiring Funds, thereon.
Since the Wells Fargo Advantage VT Omega Growth Fund, Wells Fargo Advantage VT Core Equity Fund and Wells Fargo Advantage VT Intrinsic Value Fund are Shell Funds, they have not yet commenced operations and therefore, financial statements for these Funds are not yet available.
Fund Name | Financial Statements1 | Audited or | |
Evergreen VA Core Bond Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Total Return Bond Fund | 12/31/2009 | Audited | |
Evergreen VA Omega Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Large Company Growth Fund | 12/31/2009 | Audited | |
Evergreen VA Fundamental Large Cap Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Large Company Core Fund | 12/31/2009 | Audited | |
Evergreen VA Special Values Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Small/Mid Cap Value Fund | 12/31/2009 | Audited | |
Evergreen VA Growth Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Small Cap Growth Fund | 12/31/2009 | Audited | |
Evergreen VA International Equity Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT International Core Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT Equity Income Fund | 12/31/2009 | Audited | |
Wells Fargo Advantage VT C&B Large Cap Value Fund | 12/31/2009 | Audited |
1 | The audited financial highlights as of fiscal year end are provided in Exhibit F. |
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Acquiring Funds will be passed upon by Goodwin Procter LLP as counsel to the Acquiring Trust.
ADDITIONAL INFORMATION
Each Target Fund and Acquiring Fund is subject to the informational requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith files reports and other information including proxy material and charter documents with the SEC.
These items can be inspected and copies may be obtained at prescribed rates at the Public Reference Facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of such filings may be available at the following Commission regional offices: 3 World Financial Center, Suite 400, New York, NY 10281-1022; 33 Arch Street, 23rd Floor, Boston, MA 02110-1424; 701 Market Street, Philadelphia, PA 19106-1532; 801 Brickell Ave., Suite 1800, Miami, FL 33131; 3475 Lenox Road, N.E., Suite 1000, Atlanta, GA 30326-1232; 175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604; 1801 California Street, Suite 1500, Denver, CO 80202-2656; Burnett Plaza, Suite 1900, 801 Cherry Street, Unit 18, Fort Worth, TX 76102; 15 W. South Temple Street, Suite 1800, Salt Lake City, UT 84101; 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036-3648; and 44 Montgomery Street, Suite 2600, San Francisco, CA 94104.
Copies of such materials can also be obtained by mail from the Public Reference Branch, Office of Consumer Affairs and Informational Services, SEC, Washington, D.C. 20549 at prescribed rates or by calling 1-202-551-8090.
Certificated Shares
In connection with the Merger, all issued and outstanding shares of the Target Fund, including certificated shares, will be canceled. The Acquiring Fund will not issue certificates representing its shares in connection with the Merger, and any certificated shares you possess will be considered on deposit as book entry shares of the Acquiring Fund.��After the Merger, the certificates themselves will have no monetary value and should be destroyed.
If you hold certificated shares, we ask you to destroy the certificates. Please contact the Evergreen funds at our toll free number before you destroy the certificate so that we may gather some information from you that will assist us with this process. If you have physical certificates but cannot locate them, please contact us so that we may update our files with that information.
Legal Proceedings
The Evergreen funds, EIMC and certain of EIMC's affiliates are involved in various legal actions, including private litigation and class action lawsuits, and are and may in the future be subject to regulatory inquiries and investigations.
EIMC has reached final settlements with the Securities and Exchange Commission ("SEC") and the Securities Division of the Secretary of the Commonwealth of Massachusetts ("Commonwealth") primarily relating to the liquidation of Evergreen Ultra Short Opportunities Fund ("Ultra"). The claims settled include the following: first, that during the period February 2007 through Ultra's liquidation on June 18, 2008, Ultra's former portfolio management team failed to properly take into account readily available information in valuing certain non-agency residential mortgage-backed securities held by Ultra, resulting in Ultra's NAV being overstated during the period; second, that EIMC acted inappropriately when, in an effort to explain the decline in Ultra's NAV, certain information regarding the decline was communicated to some, but not all, shareholders and financial intermediaries; third, that the Ultra portfolio management team did not adhere to regulatory requirements for affiliated cross trades in executing trades with other Evergreen funds; and finally, that from at least September 2007 to August 2008, Evergreen Investment Services, Inc. ("EIS"), EIMC's affiliated broker-dealer, did not preserve certain text and instant messages transmitted via personal digital assistant devices. In settling these matters, EIMC has agreed to a payment of $41.125 million, up to $40.125 million of which will be distributed to eligible shareholders of Ultra pursuant to a methodology and plan approved by the regulators. EIMC neither admitted nor denied the regulators' conclusions.
In addition, three purported class actions have been filed in the U.S. District Court for the District of Massachusetts relating to the same events; defendants include various Evergreen entities, including EIMC and EIS, and Evergreen Fixed Income Trust and its Trustees. The cases generally allege that investors in Ultra suffered losses as a result of (i) misleading statements in Ultra's registration statement and prospectus, (ii) the failure to accurately price securities in Ultra at different points in time and (iii) the failure of Ultra's risk disclosures and description of its investment strategy to inform investors adequately of the actual risks of the
fund.
OTHER BUSINESS
The Trustees of your Target Fund do not intend to present any other business at the Meeting. If any other matters are properly presented at the Meeting for action by shareholders of a Target Fund, the persons named as proxies will vote in accordance with the views of management of the Target Fund.
THE TRUSTEES OF YOUR TARGET TRUST RECOMMEND APPROVAL OF THE PLAN WITH RESPECT TO YOUR FUND. ANY PROPERLY EXECUTED PROXY CARDS RECEIVED WITHOUT INSTRUCTIONS WILL BE VOTED IN FAVOR OF APPROVAL OF THE PLAN.
____, 2010
Instructions for Executing Proxy Card/Voting Instructions Card
The following general rules for signing proxy cards may be of assistance to you and may help to avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the Registration on the proxy card/voting instructions card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing should conform exactly to a name shown in the Registration on the proxy card/voting instructions card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card/voting instructions card should be indicated unless it is reflected in the form of Registration. For example:
REGISTRATION CORPORATE ACCOUNTS | VALID SIGNATURE |
(1) ABC Corp. | ABC Corp. |
(2) ABC Corp. | John Doe, Treasurer |
(3) ABC Corp. c/o John Doe, Treasurer | John Doe |
(4) ABC Corp. Profit Sharing Plan | John Doe, Trustee |
TRUST ACCOUNTS | |
(1) ABC Trust | Jane B. Doe, Trustee |
(2) Jane B. Doe, Trustee u/t/d 12/28/78 | Jane B. Doe, Trustee |
CUSTODIAL OR ESTATE ACCOUNTS | |
(1) John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA | John B. Smith |
(2) John B. Smith | John B. Smith, Jr., Executor |
After completing your proxy card/voting instructions card, return it in the enclosed postage-paid envelope.
OTHER WAYS TO VOTE YOUR PROXY
VOTE BY TELEPHONE:
1. Read the prospectus/proxy statement and have your proxy card at hand.
2. Call the toll-free number on your proxy card.
VOTE BY INTERNET:
1. Read the prospectus/proxy statement and have your proxy card at hand.
2. Go to the Web site indicated on your proxy card and follow the voting instructions.
The Internet and telephone voting procedures are designed to authenticate shareholder identities, to allow shareholders to give their voting instructions, and to confirm that shareholders' instructions have been recorded properly. Please note that, although there is no charge to you for voting by telephone or electronically through the Internet associated with this prospectus/proxy statement, there may be costs associated with electronic access, such as usage charges from Internet service providers and telephone companies, that must be borne by the shareholders.
Voting by telephone or Internet is generally available 24 hours a day. Do not mail the proxy card/voting instructions card if you are voting by telephone or Internet.
If you are a shareholder and have any questions about voting, please call The Altman Group, our proxy solicitor, at (866) 342-1635 (toll free). If you are a Contract Owner and have any questions about voting, please contact your Insurance Company.
Exhibit A
Agreement and Plan of Reorganization
WELLS FARGO FUNDS TRUST
WELLS FARGO VARIABLE TRUST
EVERGREEN EQUITY TRUST
EVERGREEN FIXED INCOME TRUST
EVERGREEN INTERNATIONAL TRUST
EVERGREEN MONEY MARKET TRUST
EVERGREEN MUNICIPAL TRUST
EVERGREEN SELECT EQUITY TRUST
EVERGREEN SELECT FIXED INCOME TRUST
EVERGREEN SELECT MONEY MARKET TRUST
EVERGREEN VARIABLE ANNUITY TRUST
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of March 1, 2010
This AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") is made as of this March 1, 2010, by and among Wells Fargo Funds Trust and Wells Fargo Variable Trust (each a "WFA Fund Trust"), each a Delaware statutory trust, for itself and with respect to each of its series that is an Acquiring Fund, as defined below, or a Target Fund, as defined below, each WFA Fund Trust, Acquiring Fund and Target Fund acting on its own behalf separately from all of the other parties hereto and not jointly or jointly and severally with any other party hereto; Evergreen Equity Trust, Evergreen Fixed Income Trust, Evergreen International Trust, Evergreen Money Market Trust, Evergreen Municipal Trust, Evergreen Select Equity Trust, Evergreen Select Fixed Income Trust, Evergreen Select Money Market Trust and Evergreen Variable Annuity Trust (each an "Evergreen Fund Trust"), each a Delaware statutory trust, for itself and with respect to each of its series that is a Target Fund, as defined below, each Evergreen Fund Trust and Target Fund acting on its own behalf separately from all of the other parties hereto and not jointly or jointly and severally with any other party hereto; as to Section 17 of this Plan only, Wells Fargo Funds Management, LLC ("Wells Fargo Funds Management"), the investment adviser to each series of each WFA Fund Trust; and as to Section 17 of this Plan only, Evergreen Investment Management Company, LLC ("EIMC"), the investment adviser to each series of each Evergreen Fund Trust;
WHEREAS, the WFA Fund Trusts and the Evergreen Fund Trusts are open-end management investment companies registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Wells Fargo Funds Management and EIMC are "affiliated persons" of each other under Section 2(a)(3)(C) of the 1940 Act due to their common ownership;
WHEREAS, the parties desire that each Acquiring Fund acquire all of the Assets of its Corresponding Target Fund, as defined below, in return for shares of the Acquiring Fund and the assumption by the Acquiring Fund of all of the Liabilities of the Corresponding Target Fund; and that such shares of the Acquiring Fund be distributed to the shareholders of the Corresponding Target Fund in connection with the liquidation and termination of the Corresponding Target Fund (each transaction between an Acquiring Fund and its Corresponding Target Fund, a "Reorganization");
WHEREAS, this Plan contemplates multiple Reorganizations but is intended to have effect in respect of each Reorganization as a separate agreement and plan of reorganization between an Acquiring Fund and one Corresponding Target Fund and is to be read and interpreted accordingly;
WHEREAS, each Acquiring Fund and each WFA Fund Trust acting for itself and on behalf of such Acquiring Fund, and each Target Fund and each Selling Fund Trust acting for itself and on behalf of such Target Fund, is acting separately from all of the other parties and their series, as applicable, and not jointly or jointly and severally with any other party;
WHEREAS, without limiting the foregoing, references in this Plan to "the WFA Fund Trust" and "the Selling Fund Trust" or otherwise to parties to this Plan shall be references only to the WFA Fund Trust or the Selling Fund Trust whose series are engaged in any specific Reorganization transaction; and
WHEREAS, the parties intend that each Reorganization qualify as a "reorganization," within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that each Acquiring Fund and its Corresponding Target Fund will be a "party to a reorganization," within the meaning of Section 368(b) of the Code, with respect to the Reorganization.
NOW, THEREFORE, in accordance with the mutual promises described herein, the parties agree as follows:
1. Definitions.
The following terms shall have the following meanings:
1933 Act | The Securities Act of 1933, as amended. |
1934 Act | The Securities Exchange Act of 1934, as amended. |
Acquiring Class | The class of shares of an Acquiring Fund that a WFA Fund Trust will issue to a Target Fund in respect of the Assets and Liabilities of the Target Fund attributable to the Corresponding Target Class, as set forth in Annex A. |
Acquiring Fund | Each Fund listed in the column entitled "Acquiring Fund" in Annex A. |
Acquiring Fund Financial Statements | The audited financial statements of an Acquiring Fund for its most recently completed fiscal year together with the unaudited financial statements of the Acquiring Fund for any semi-annual period completed since the end of the most recently completed fiscal year, in each case to the extent available. |
Active Reorganization | Each Reorganization set forth in the Active Reorganization Table on Annex A. |
Annex A | Annex A to this Plan, as it may be amended from time to time. |
Assets | All property and assets of any kind and all interests, rights, privileges and powers of or attributable to a Fund, whether or not determinable at the appropriate Effective Time and wherever located. Assets include, without limitation, all cash, cash equivalents, securities, claims (whether absolute or contingent, known or unknown, accrued or unaccrued or conditional or unmatured), contract rights and receivables (including dividend and interest receivables and receivables for shares sold) owned by a Fund and any deferred or prepaid expense shown as an asset on such Fund's books. |
Assets List | A list of securities and other Assets of or attributable to a Fund as of the date provided. |
Board | The Board of Trustees of a WFA Fund Trust or an Evergreen Fund Trust. |
Closing Date | The closing date for each Reorganization listed in the column entitled "Closing Date" in Annex A or such other date as the parties may agree to in writing, including any postponements described in the definition of Valuation Time. |
Corresponding Acquiring Class | The Acquiring Fund share class set forth opposite a Target Class in Annex A. |
Corresponding Acquiring Fund | The Acquiring Fund set forth opposite a Target Fund in Annex A. |
Corresponding Target Class | The Target Fund share class set forth opposite an Acquiring Class in Annex A. |
Corresponding Target Fund | The Target Fund set forth opposite an Acquiring Fund in Annex A. |
Effective Time | 9:00 a.m. Eastern Time on the business day following the Closing Date of a Reorganization, or such other time and date as the parties may agree to in writing. |
Fund | An Acquiring Fund or a Target Fund. |
HSR Act | The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. |
Liabilities | All liabilities of, or allocated or attributable to, a Fund, whether known or unknown, accrued or unaccrued, absolute or contingent, conditional or fixed, matured or unmatured. For clarity and without limitation, the Liabilities of a Target Fund of an Evergreen Fund Trust include all of its present or future obligations (or the obligations of any Evergreen Fund Trust relating to the Target Fund) under or in respect of deferred compensation and as to indemnification (including without limitation with respect to any action, suit, or proceeding, whether or not currently pending or threatened). |
Material Agreements | The agreements set forth in Schedule A, as it may be amended from time to time. |
Reorganization Documents | With respect to an Acquiring Fund, such bills of sale, assignments, and other instruments of transfer as the WFA Fund Trust in question reasonably deems necessary or desirable to effect any Corresponding Target Fund's transfer of all of its rights and title to and interest in its Assets to the Acquiring Fund. With respect to a Target Fund, such instruments of assumption, instruments of transfer, and other documents as the Selling Fund Trust in question reasonably deems necessary or desirable to effect the Corresponding Acquiring Fund's assumption of all of the Target Fund's Liabilities. |
Schedule A | Schedule A to this Plan, as it may be amended from time to time. |
Selling Fund Trust | Each WFA Fund Trust and Evergreen Fund Trust that has a Target Fund as a series. |
Shell Acquiring Fund | Each Acquiring Fund set forth in the "Shell Reorganization Table" in Annex A. |
Shell Reorganization | Each Reorganization set forth in the Shell Reorganization Table in Annex A. |
Target Class | The Target Fund share class set forth opposite an Acquiring Class in Annex A. |
Target Fund | Each Fund listed in the column entitled "Target Fund" in Annex A. |
Target Fund Financial Statements | The audited financial statements of a Target Fund for its most recently completed fiscal year together with the unaudited financial statements of the Target Fund for any semi-annual period completed since the end of the most recently completed fiscal year, in each case to the extent available. |
Valuation Time | With respect to each Reorganization, the last time on the Closing Date, or such other time and date as the parties may agree to in writing, when a WFA Fund Trust determines the net asset value of the shares of the Acquiring Fund as set forth in the Acquiring Fund's registration statement on Form N-1A. In the event the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund shall be closed to trading, or trading thereon shall be restricted or trading or the reporting of trading on the New York Stock Exchange or other primary trading market shall be disrupted so that accurate appraisal of the value of the net assets of the Acquiring Fund or any Target Fund is impracticable, the Valuation Time shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. In such event, the Effective Time shall automatically be postponed so that it occurs on the first business day after the Valuation Time. |
2. Regulatory Filings. For each Reorganization, the WFA Fund Trust whose series is the Acquiring Fund shall prepare and file any required filings including, without limitation, filings with state or foreign securities regulatory authorities in connection with the Reorganization, and each Selling Fund Trust whose series is a Corresponding Target Fund shall assist the WFA Fund Trust in preparing any such required filings.
3. Transfer of Target Fund Assets. Each Selling Fund Trust, with respect to each of its series that is a Target Fund, and each WFA Fund Trust, with respect to each of its series that is an Acquiring Fund, shall take the following steps with respect to each Reorganization involving that Target Fund or Acquiring Fund:
(a) Within a reasonable time prior to the Closing Date, the Target Fund shall provide, if requested, its Assets List to its Corresponding Acquiring Fund. The Target Fund may sell any investment on the Assets List prior to the Valuation Time. After the Target Fund provides the Assets List, the Target Fund will notify its Corresponding Acquiring Fund of its purchase or incurrence of additional investments or of any additional encumbrances, rights, restrictions or claims not reflected on the Assets List, within a reasonable time period after such purchase or incurrence. Within a reasonable time after receipt of the Assets List and prior to the Closing Date, the Corresponding Acquiring Fund will advise the Target Fund in writing of any investments shown on the Assets List that the Corresponding Acquiring Fund has reasonably determined to be impermissible or inconsistent with the investment objective, policies and restrictions of the Corresponding Acquiring Fund.
(b) The Selling Fund Trust shall assign, transfer, deliver and convey the Target Fund's Assets to its Corresponding Acquiring Fund at the Reorganization's Effective Time. In exchange for the transfer of the Assets, the Corresponding Acquiring Fund shall simultaneously assume the Target Fund's Liabilities and issue and deliver to the Target Fund full and fractional shares of beneficial interest of each Acquiring Class. The Corresponding Acquiring Fund shall determine the number of shares of each Acquiring Class to issue by dividing the value of the Assets net of Liabilities attributable to its Corresponding Target Class by the net asset value of one Acquiring Class share. Based on this calculation, the Corresponding Acquiring Fund shall issue shares of beneficial interest of each Acquiring Class with an aggregate net asset value equal to the value of the Assets net of Liabilities of the Corresponding Target Class. The Corresponding Acquiring Fund shall then accept the Target Fund's Assets and assume the Target Fund's Liabilities such that at and after the Effective Time (i) all of the Target Fund's Assets shall become and be Assets of its Corresponding Acquiring Fund and (ii) all of the Target Fund's Liabilities at the Effective Time shall attach to the Corresponding Acquiring Fund, and be enforceable against the Corresponding Acquiring Fund to the same extent as if initially incurred by the Corresponding Acquiring Fund.
(c) The parties shall determine the net asset value of the Acquiring Fund shares to be delivered, and the value of the Assets to be conveyed net of Liabilities, as of the Valuation Time in accordance with the applicable WFA Fund Trust's current valuation procedures as described in the then-current prospectus or prospectuses or statement or statements of additional information of the Acquiring Fund. For money market funds, the net asset value of the Acquiring Fund shares to be delivered, and the value of the Assets to be conveyed net of Liabilities, will be calculated using the amortized cost valuation procedures approved by the Board of the WFA Fund Trust, as described in the then-current prospectus or prospectuses or statement or statements of additional information of the Acquiring Fund. The parties shall make all computations to the fourth decimal place or such other decimal place as the parties may agree to in writing.
(d) The Selling Fund Trust shall cause its custodian to transfer the Target Fund's Assets with good and marketable title to the account of its Corresponding Acquiring Fund. The Selling Fund Trust shall also cause its custodian to transfer all cash in the form of immediately available funds. In addition, the Selling Fund Trust shall cause its custodian to transfer any Assets that were not transferred to the Acquiring Fund's account at the Effective Time to the Acquiring Fund's account at the earliest practicable date thereafter.
4. Liquidation and Termination of Target Funds, Registration of Shares and Access to Records. Each Selling Fund Trust, with respect to each of its series that is a Target Fund, and each WFA Fund Trust, with respect to each of its series that is an Acquiring Fund, shall take the following steps with respect to each Reorganization involving that Target Fund or Acquiring Fund:
(a) At or as soon as is reasonably practical after the Effective Time, the Selling Fund Trust shall distribute to shareholders of record of each Target Class the shares of beneficial interest of its Corresponding Acquiring Class pro rata on the basis of the shares of the Target Class owned by such shareholders. Each shareholder also shall have the right to receive, at or as soon as practicable after the Effective Time, any unpaid dividends or other distributions that the Selling Fund Trust may have declared with respect to the Target Class shares. The WFA Fund Trust shall record on its books the ownership by the Target Fund shareholders of the Corresponding Acquiring Fund shares. The WFA Fund Trusts do not issue certificates representing the Acquiring Fund shares, and shall not be responsible for issuing certificates to shareholders of the Target Funds. The Selling Fund Trust shall wind up the affairs of the Target Fund and shall take all steps as are necessary and proper to dissolve, liquidate and terminate the Target Fund and the Selling Fund Trust (to the extent it is an Evergreen Fund Trust) in accordance with applicable law and regulations and its Declaration of Trust and By-Laws, as soon as is reasonably practicable after the Effective Time.
(b) At and after the Closing Date, the Selling Fund Trust, with respect to the Target Fund, shall provide the applicable WFA Fund Trust, with respect to the Corresponding Acquiring Fund, and its transfer agent with immediate access to: (i) all of its records containing the names, addresses and taxpayer identification numbers of all of the Target Fund's shareholders and the number and percentage ownership of the outstanding shares of the Target Class owned by each shareholder immediately prior to the Effective Time; and (ii) all original documentation (including all applicable Internal Revenue Service forms, certificates, certifications and correspondence) in the possession or control of the Selling Fund Trust relating to the Target Fund shareholders' taxpayer identification numbers and their liability for or exemption from back-up withholding. Any payments made to service providers in connection with such direction shall be borne by both Wells Fargo Funds Management and EIMC pursuant to Section 17 of this Plan. As soon as practicable following the Reorganization, the Selling Fund Trust shall deliver all books and records with respect to the Target Fund in its possession or control, including books and records showing the ownership of all of the issued and outstanding shares of each Target Class, to the WFA Fund Trust, and the WFA Fund Trust shall thereafter have the responsibility to preserve and maintain, or to cause its service providers to preserve and maintain, all such records received by it in accordance with Section 31 of, and Rule 31a-1 and 31a-2 under, the 1940 Act.
5. Representations, Warranties and Agreements of a Selling Fund Trust. Each Selling Fund Trust, for itself and with respect to each of its series that is a Target Fund, separately and not jointly, represents and warrants to, and agrees with, the applicable WFA Fund Trust in any Reorganization involving such Target Fund, as follows:
(a) The Selling Fund Trust is a statutory trust, duly created, validly existing and in good standing under the laws of the State of Delaware. The Board of the Selling Fund Trust duly established and designated the Target Fund as a series of the Selling Fund Trust and each Target Class as a class of the Target Fund. The Selling Fund Trust is an open-end management investment company registered with the SEC under the 1940 Act, and such registration is in full force and effect.
(b) The Selling Fund Trust has the power and all necessary federal, state and local qualifications and authorizations to own all of its properties and Assets, to carry on its business as now being conducted and as described in its currently effective registration statement on Form N-1A as filed with the SEC, to enter into this Plan and to consummate the transactions contemplated herein.
(c) The Board of the Selling Fund Trust has duly authorized the execution and delivery of this Plan and approved the performance of the transactions contemplated herein. Duly authorized officers of the Selling Fund Trust have executed and delivered this Plan. This Plan represents a valid and binding obligation of the Selling Fund Trust with respect to the Target Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery of this Plan do not, and the consummation of the transactions contemplated by this Plan will not, violate any law or regulation applicable to the Selling Fund Trust, the Declaration of Trust or By-Laws of the Selling Fund Trust or any agreement, indenture, instrument, contract or other undertaking to which the Selling Fund Trust is a party or by which it is bound. No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Selling Fund Trust of the transactions contemplated by this Plan, except such as may be required under the 1933 Act, the 1934 Act, the 1940 Act, and insurance, securities or blue sky laws of any U.S. state or the District of Columbia or Puerto Rico.
(d) The Target Fund has qualified and met the requirements for treatment as a "regulated investment company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code in respect of each taxable year since the commencement of its operations, and will continue to so qualify until the Effective Time and has computed (or will compute) its federal income tax liability, if any, under Sections 852 and 4982 of the Code.
(e) The Selling Fund Trust has duly authorized and validly issued all of the issued and outstanding shares of the Target Fund and all of those shares are, and on the Closing Date will be, validly outstanding, fully paid and non-assessable, and were and will have been offered for sale and sold in conformity, in all material respects, with the registration or qualification requirements of all applicable federal and state securities laws. There are, and will be as of the Closing Date, no outstanding options, warrants or other rights to subscribe for or purchase any Target Fund shares, nor are there outstanding any securities convertible into Target Fund shares.
(f) The Selling Fund Trust with respect to the Target Fund is, and at the Effective Time will be, in compliance in all material respects with all applicable laws, rules and regulations, including, without limitation, the 1940 Act, the 1933 Act, the 1934 Act and all applicable state securities laws, and from the date of this Plan through the Closing Date will comply in all material respects with all newly adopted rules and regulations under the 1940 Act on or before their compliance dates. The Selling Fund Trust with respect to the Target Fund is in compliance in all material respects with the investment policies and restrictions applicable to it set forth in the registration statement on Form N-1A as currently in effect in respect of it. The value of the net assets of the Target Fund is determined using portfolio valuation methods that comply in all material respects with the requirements of the 1940 Act and the policies of such Target Fund, except as has been disclosed to its Corresponding Acquiring Fund.
(g) Except as otherwise provided herein, the Selling Fund Trust shall operate the business of the Target Fund in the ordinary course between the date hereof and the Effective Time, it being agreed that such ordinary course of business will include, without limitation: (i) the declaration and payment of dividends and distributions pursuant to standard dividend and distribution policies approved by such Target Fund's Board prior to the date of this Plan or otherwise in the ordinary course of business, (ii) the declaration and payment of any other dividends and distributions deemed advisable by the Target Fund after consultation with its Corresponding Acquiring Fund in anticipation of the Reorganization, including the declaration and payment of dividends necessary to avoid a fund-level tax for the taxable year ending on the Closing Date and, as applicable, any prior taxable year in respect of which such Target Fund is eligible as of the Closing Date to declare a "spillback" dividend under Section 855 of the Code, and (iii) the taking of any other commercially reasonable action in anticipation of the Reorganization (and obtaining such additional "run off" insurance coverage as the Selling Fund Trust's Board may approve, and selling assets for purposes of recognizing taxable gains to offset tax-loss carryforwards).
(h) At the Effective Time, the Selling Fund Trust with respect to the Target Fund will have good and marketable title to its Assets and full right, power and authority to assign, transfer, deliver and convey such Assets.
(i) The Target Fund Financial Statements fairly present the financial position of the Target Fund as of the date indicated. The Target Fund Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied.
(j) To the knowledge of the Selling Fund Trust, except as has been disclosed to its Corresponding Acquiring Fund, the Target Fund has no material Liabilities, whether or not determined or determinable, other than: 1) Liabilities disclosed or provided for in the Target Fund Financial Statements; and 2) Liabilities incurred in the ordinary course of business subsequent to the Target Fund Financial Statements. The Target Fund does not have any Liabilities to any service provider of the Selling Fund Trust for fees previously waived or deferred by such service provider.
(k) Except as has been disclosed to its Corresponding Acquiring Fund: (i) the Selling Fund Trust does not know of any claims, actions, suits, inquiries, investigations or proceedings of any type pending or threatened against the Selling Fund Trust in respect of the Target Fund, the Target Fund or their Assets or businesses, or against any investment adviser or principal underwriter of the Target Fund relating to the services such adviser or underwriter provides to the Target Fund; and (ii) the Selling Fund Trust does not know of any facts that it currently has reason to believe are likely to form the basis for the institution of any such claim, action, suit, inquiry, investigation or proceeding against the Selling Fund Trust in respect of the Target Fund, the Target Fund or their Assets or businesses, or against any investment adviser or principal underwriter of the Target Fund relating to the services such adviser or underwriter provides to the Target Fund. For purposes of this provision, investment underperformance or negative investment performance shall not be deemed to constitute such facts. Except as has been disclosed to its Corresponding Acquiring Fund, the Target Fund is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that adversely affects, or is reasonably likely to adversely affect in a material manner, its financial condition, results of operations, business, properties or Assets or the Target Fund's ability to consummate the transactions contemplated by this Plan.
(l) All contracts and agreements other than an Evergreen Fund Trust's Agreement and Declaration of Trust and Bylaws, each as amended, that are material to the Target Fund's business and to which the Selling Fund Trust is a party or by which it is bound, in each case, in respect of the Target Fund, are listed on Schedule A. Except as has been disclosed to its Corresponding Acquiring Fund, no material default has occurred and is continuing in respect of the Target Fund under any such contract or agreement.
(m) The Selling Fund Trust has timely filed all tax returns in respect of the Target Fund for all of its taxable years to and including its most recent taxable year required to be filed on or before the date of this Plan, has paid all taxes payable pursuant to such returns, and has made available to the Corresponding Acquiring Fund all of the Target Fund's previously filed tax returns. To the knowledge of the Selling Fund Trust, no such tax return has been or is currently under audit, and no assessment has been asserted with respect to any return. The Selling Fund Trust will file all of the Target Fund's tax returns (and pay any taxes due thereon) for all of its taxable periods ending on or before the Closing Date not previously filed on or before their due dates (taking account of any valid extensions thereof).
(n) Since the date of the most recent Target Fund Financial Statements, there has been no material adverse change in the financial condition, business, properties or Assets of the Target Fund. For purposes of this provision, the effects of investment underperformance, negative investment performance or net redemptions shall not, individually or in the aggregate, be deemed to give rise to any such change.
(o) The current prospectus and statement of additional information, each as supplemented, of the Target Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the SEC thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(p) Any information provided in writing by the Selling Fund Trust in respect of the Target Fund or by the Target Fund for use, to the extent applicable, in a WFA Fund Trust's registration statement on Form N-14 relating to the Reorganization (the "Registration Statement"), does not, and from the date provided through and until the date of the shareholder meeting will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading.
(q) The Target Fund shall issue and deliver or cause its custodian to issue and deliver to the Secretary of the WFA Fund Trust a certificate identifying the Assets of the Target Fund held by it as of the Valuation Time.
(r) Subject to the provisions of this Plan, the Target Fund will take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Plan, including any actions required to be taken after the Closing Date.
6. Representations, Warranties and Agreements of a WFA Fund Trust. Each WFA Fund Trust, for itself and with respect to each of its series that is an Acquiring Fund, separately and not jointly, represents and warrants to, and agrees with the applicable Selling Fund Trust in any Reorganization involving such Acquiring Fund, as follows:
(a) The WFA Fund Trust is a statutory trust duly created, validly existing and in good standing under the laws of the State of Delaware. The Board of the WFA Fund Trust duly established and designated the Acquiring Fund as a series of the WFA Fund Trust and each Acquiring Class as a class of the Acquiring Fund. The WFA Fund Trust is an open-end management investment company registered with the SEC under the 1940 Act, and such registration is in full force and effect.
(b) The WFA Fund Trust has the power and all necessary federal, state and local qualifications and authorizations to own all of its properties and Assets, to carry on its business as now being conducted and as described in its currently effective registration statement on Form N-1A as filed with the SEC, to enter into this Plan and to consummate the transactions contemplated herein.
(c) The Board of the WFA Fund Trust has duly authorized the execution and delivery of this Plan and approved the performance of the transactions contemplated herein. Duly authorized officers of the WFA Fund Trust have executed and delivered this Plan. This Plan represents a valid and binding obligation of the WFA Fund Trust with respect to the Acquiring Fund, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery of this Plan do not, and the consummation of the transactions contemplated by this Plan will not, violate any law or regulation applicable to the WFA Fund Trust, the Declaration of Trust or By-Laws of the WFA Fund Trust or any agreement, indenture, instrument, contract or other undertaking to which the WFA Fund Trust is a party or by which it is bound. No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the WFA Fund Trust of the transactions contemplated by this Plan, except such as may be required under the 1933 Act, the 1934 Act, the 1940 Act, and insurance, securities or blue sky laws of any U.S. state or the District of Columbia or Puerto Rico.
(d) The Acquiring Fund has qualified and met the requirements for treatment as a "regulated investment company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code in respect of each taxable year since the commencement of its operations, and will continue to so qualify until the Effective Time and has computed (or will compute) its federal income tax liability, if any, under Sections 852 and 4982 of the Code.
(e) If the Reorganization is a Shell Reorganization, the applicable Acquiring Fund shall have no Assets or Liabilities as of the Closing Date, and there shall be no issued and outstanding shares of such Acquiring Fund prior to or at the Closing Date, other than those acquired, assumed or issued in order to facilitate the commencement of the operations of such Acquiring Fund.
(f) The WFA Fund Trust has duly authorized and validly issued all of the issued and outstanding shares of the Acquiring Fund and all of those shares are, and on the Closing Date will be, validly outstanding, fully paid and non-assessable, and were and will have been offered for sale and sold in conformity, in all material respects, with the registration or qualification requirements of all applicable federal and state securities laws. Before the Closing Date, the WFA Fund Trust shall have duly authorized the shares of the Acquiring Fund to be issued and delivered to the Target Fund as of the Effective Time. When issued and delivered, the shares of the Acquiring Fund shall have been registered for sale under the 1933 Act and qualified under all applicable state securities laws and shall be duly and validly issued, fully paid and non-assessable, and no shareholder of the Acquiring Fund shall have any preemptive right of subscription or purchase in respect of them. There are, and will be as of the Closing Date, no outstanding options, warrants or other rights to subscribe for or purchase any Acquiring Fund shares, nor are there outstanding any securities convertible into Acquiring Fund shares.
(g) The WFA Fund Trust with respect to the Acquiring Fund is, and at the Effective Time will be, in compliance in all material respects with all applicable laws, rules and regulations, including, without limitation, the 1940 Act, the 1933 Act, the 1934 Act, and all applicable state securities laws, and from the date of this Plan through the Closing Date will comply in all material respects with all newly adopted rules and regulations under the 1940 Act on or before their compliance dates. The WFA Fund Trust with respect to the Acquiring Fund is in compliance in all material respects with the investment policies and restrictions applicable to it set forth in the registration statement on Form N-1A as currently in effect in respect of it. The value of the net assets of the Acquiring Fund is determined using portfolio valuation methods that comply in all material respects with the requirements of the 1940 Act and the policies of such Acquiring Fund, except as has been disclosed to its Corresponding Target Fund.
(h) Except as otherwise provided herein, the WFA Fund Trust shall operate the business of the Acquiring Fund in the ordinary course between the date hereof and the Effective Time, it being agreed that such ordinary course of business will include, without limitation: (i) the declaration and payment of dividends and distributions pursuant to standard dividend and distribution policies approved by such Acquiring Fund's Board prior to the date of this Plan, (ii) the declaration and payment of any other dividends and distributions deemed advisable by mutual agreement of such Acquiring Fund and its Corresponding Target Fund in anticipation of the Reorganization, and (iii) the taking of any other commercially reasonable action in anticipation of the Reorganization.
(i) The Acquiring Fund Financial Statements fairly present the financial position of the Acquiring Fund as of the date indicated. The Acquiring Fund Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied.
(j) To the knowledge of the WFA Fund Trust, except as has been disclosed to its Corresponding Target Fund, the Acquiring Fund has no material Liabilities, whether or not determined or determinable, other than: 1) Liabilities disclosed or provided for in the Acquiring Fund Financial Statements, and 2) Liabilities incurred in the ordinary course of business subsequent to the Acquiring Fund Financial Statements. The Acquiring Fund does not have any Liabilities to any service provider of the WFA Fund Trust for fees previously waived or deferred by such service provider.
(k) Except as has been disclosed to its Corresponding Target Fund, (i) the WFA Fund Trust does not know of any claims, actions, suits, inquiries, investigations or proceedings of any type pending or threatened against the WFA Fund Trust in respect of the Acquiring Fund, the Acquiring Fund or their Assets or businesses, or against any investment adviser or principal underwriter of the Acquiring Fund relating to the services such adviser or underwriter provides to the Acquiring Fund; and (ii) the WFA Fund Trust does not know of any facts that it currently has reason to believe are likely to form the basis for the institution of any such claim, action, suit, inquiry, investigation or proceeding against the WFA Fund Trust in respect of the Acquiring Fund, the Acquiring Fund or any investment adviser or principal underwriter of the Acquiring Fund relating to the services such adviser or underwriter provides to the Acquiring Fund. For purposes of this provision, investment underperformance or negative investment performance shall not be deemed to constitute such facts. Neither the WFA Fund Trust in respect of the Acquiring Fund, nor to its knowledge, any investment adviser or principal underwriter of the Acquiring Fund is a party to or subject to the provisions of any order, decree or judgment of any court or governmental body that adversely affects, or is reasonably likely to adversely affect in a material manner, its financial condition, results of operations, business, properties or Assets or the Acquiring Fund's ability to consummate the transactions contemplated by this Plan.
(l) All contracts and agreements that are material to the Acquiring Fund's business are listed on Schedule A. Except as has been disclosed to its Corresponding Target Fund, no material default has occurred and is continuing in respect of the Acquiring Fund under any such contract or agreement.
(m) The WFA Fund Trust has timely filed all tax returns in respect of the Acquiring Fund for all of its taxable years to and including its most recent taxable year required to be filed on or before the date of this Plan, has paid all taxes payable pursuant to such returns and has made available to the Corresponding Target Fund all of the Acquiring Fund's previously filed tax returns. To the knowledge of the WFA Fund Trust, no such return is currently under audit and no assessment has been asserted with respect to any return. The WFA Fund Trust will file all of the Acquiring Fund's tax returns (and pay any taxes due thereon) for all of its taxable periods ending on or before the Closing Date not previously filed on or before their due dates (taking account of any valid extensions thereof).
(n) Since the date of the most recent Acquiring Fund Financial Statements, there has been no material adverse change in the financial condition, business, properties or Assets of the Acquiring Fund. For purposes of this provision, the effects of investment underperformance, negative investment performance or net redemptions shall not, individually or in the aggregate be deemed to give rise to any such change.
(o) The current prospectus and statement of additional information and registration statement on Form N-1A of the Acquiring Fund conform in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the SEC thereunder and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(p) To the extent applicable, as of the effective date of the WFA Fund Trust's Registration Statement, the date of the meeting of shareholders of the Target Fund relating to the Reorganization, and the Closing Date, the Prospectus/Proxy Statement (the "Prospectus/Proxy Statement") which forms a part of the Registration Statement and the Registration Statement insofar as it relates to the applicable WFA Fund Trust in respect to the Acquiring Fund or the Acquiring Fund itself, (i) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading and (ii) will comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder; provided however, that none of the representations and warranties in this subsection shall apply to statements in or omissions from the Registration Statement or the Prospectus/Proxy Statement made in reliance upon and in conformity with information furnished by the Target Fund to the Acquiring Fund in writing for use in the Registration Statement or the Prospectus/Proxy Statement.
(q) At the Effective Time, the Acquiring Fund shall issue and deliver or cause its transfer agent to issue and deliver to the Secretary of the Selling Fund Trust a confirmation evidencing that the shares of the Acquiring Fund to be credited at the Effective Time have been credited to the Corresponding Target Fund's account on the books of the Acquiring Fund.
(r) Subject to the provisions of this Plan, the Acquiring Fund will take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Plan, including any actions required to be taken after the Closing Date.
(s) Each Acquiring Fund Trust, on behalf of each Acquiring Fund, agrees that any information regarding the Corresponding Target Fund that is known, or reasonably should be known, by any of the Selling Fund Trust or the Selling Fund Trust's investment adviser or any one or more of their officers, employees or affiliates shall be deemed to have been disclosed to the Acquiring Fund prior to the date of this Plan or the Valuation Time, whichever is earlier.
7. Conditions to a Target Fund's Obligations. The obligations of the Selling Fund Trust with respect to each of its series that is a Target Fund in a Reorganization shall be subject to satisfaction of the following conditions precedent, provided however, that Sections 7(e), 7(f), 7(p), 7(q) and 7(r) are conditions precedent only with respect to Reorganizations involving Target Funds that are series of an Evergreen Fund Trust:
(a) The shareholders of the Target Fund shall have approved the Reorganization if and to the extent, and in the manner, required by the Selling Fund Trust's Declaration of Trust or By-Laws and applicable law, or if shareholder approval is otherwise sought by the Selling Fund Trust in respect of the Target Fund. For clarity, the failure of any one Target Fund's shareholders to satisfy this condition shall release the Selling Fund Trust of its obligation under this Plan with respect to the Reorganization involving that Target Fund but not with respect to any other Reorganization.
(b) This Plan and the transactions contemplated by it shall have been approved by the affirmative vote of (i) at least a majority of the Board of the WFA Fund Trust (including a majority of those Trustees who are not "interested persons" of any party to this Plan, as defined in Section 2(a)(19) of the 1940 Act) and (ii) at least a majority of the Board of the Selling Fund Trust (including a majority of those Trustees who are not "interested persons" of any party to this Plan, as defined in Section 2(a)(19) of the 1940 Act). The WFA Fund Trust shall have duly executed and delivered to the Target Fund its Corresponding Acquiring Fund's Reorganization Documents.
(c) All representations and warranties of the WFA Fund Trust made in this Plan that are not by their terms qualified as to materiality shall be true and correct in all material respects, and all representations and warranties of the WFA Fund Trust made in this Plan that by their terms are qualified as to materiality are true and correct in all respects, in each case as if made at and as of the Valuation Time and the Effective Time.
(d) The WFA Fund Trust shall have delivered to the Selling Fund Trust a certificate dated as of the Closing Date and executed in its name by its Secretary or Treasurer (or Assistant Secretary or Assistant Treasurer) stating: 1) that all representations and warranties of the WFA Fund Trust made in this Plan that by their terms are not qualified as to materiality are true and correct in all material respects, and all representations and warranties of the WFA Fund Trust made in this Plan that by their terms are qualified as to materiality are true and correct in all respects, in each case at and as of the Valuation Time;
2) that the Target Fund's Assets are consistent with its Corresponding Acquiring Fund's investment objectives, policies and restrictions and that the Target Fund's Assets may be lawfully acquired by its Corresponding Acquiring Fund and the Target Fund's Liabilities may be lawfully assumed by its Corresponding Acquiring Fund; and 3) that the WFA Fund Trust with respect to the Target Fund has complied with all of the agreements and covenants to be performed or satisfied by it under this Plan in respect of the Acquiring Fund.
(e) The Selling Fund Trust shall have received an opinion of Richards, Layton & Finger, P.A., as special Delaware counsel to the WFA Fund Trust, in form and substance reasonably satisfactory to the Selling Fund Trust and dated as of the Closing Date, addressed to the Selling Fund Trust, with respect to the Target Fund, to the effect that:
(1) The WFA Fund Trust has been duly formed and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. § 3801, et seq. (the "Act"), and has the power and authority under its Declaration of Trust and the Act to execute, deliver and perform its obligations under this Plan. Under the Act and its Declaration of Trust, the WFA Fund Trust has the requisite trust power and authority to own all of its properties and conduct its business all as described in its Declaration of Trust;
(2) The execution and delivery of this Plan and the consummation by the WFA Fund Trust of the applicable transactions contemplated thereby have been duly authorized by all requisite statutory trust action on the part of the WFA Fund Trust under its Declaration of Trust and the Act. Assuming execution and delivery by duly authorized officers of the WFA Fund Trust, this Plan has been duly executed and delivered by the WFA Fund Trust;
(3) The WFA Fund Trust has the power to execute, deliver and perform its obligations under this Plan;
(4) This Plan constitutes a legal, valid and binding agreement of the WFA Fund Trust, enforceable against the WFA Fund Trust, in accordance with its terms;
(5) The Acquiring Fund that is a series of the WFA Fund Trust has been duly established as a separate series under the WFA Fund Trust's Declaration of Trust and Section 3806(b)(2) of the Act;
(6) Each Acquiring Class of the Acquiring Fund has been duly established as a class of beneficial interests of the Acquiring Fund under the WFA Fund Trust's Declaration of Trust and Section 3806(b)(1) of the Act;
(7) The shares of the Acquiring Fund to be delivered as provided for by this Plan are duly authorized and upon delivery will be validly issued, fully paid and, subject to any shareholder payments set forth in a specified section of the WFA Fund Trust's Declaration of Trust, if any, non-assessable beneficial interests in the Acquiring Fund, and under the governing instruments of WFA Fund Trust, no shareholder of the Acquiring Fund has any preemptive right or similar rights thereof;
(8) Neither the execution, delivery and performance by the WFA Fund Trust of this Plan, nor the consummation by the WFA Fund Trust of the applicable transactions contemplated thereby, violates (i) the Declaration of Trust of the WFA Fund Trust or (ii) any law, rule, or regulation of the State of Delaware applicable to the WFA Fund Trust; and
(9) Neither the execution, delivery and performance by the WFA Fund Trust of this Plan, nor the consummation by such WFA Fund Trust of any of the applicable transactions contemplated thereby, requires the consent or approval of, the withholding of objection on the part of, the giving of notice to, the filing, registration or qualification with, or the taking of any other action in respect of any governmental authority or agency of the State of Delaware.
In rendering such opinion, such counsel may assume all conditions precedent set forth in this Plan have been satisfied and such counsel may include other customary assumptions and qualifications for opinions of this type, including without limitation, customary enforceability assumptions (including the effect of principles of equity, including .principles of commercial reasonableness and good faith and fair dealing) and that the Trustees of the WFA Fund Trust have complied with their fiduciary duties in approving this Plan and that the Reorganizations are fair in all respects. In addition, such counsel need not express an opinion with respect to any provisions of this Plan that purport to obligate the WFA Fund Trust to cause other persons or entities to take certain actions or act in a certain way insofar as such opinion would relate to the actions of such other persons or entities, any provisions of this Plan to the extent that such provisions purport to bind the Trustees of the WFA Fund Trust in the exercise of their fiduciary duties or to bind parties not a signatory to this Plan and any provision of this Plan to the extent such provision relates to the dissolution or liquidation of the WFA Fund Trust or series thereof.
(f) The Selling Fund Trust shall have received an opinion of Goodwin Procter LLP, as counsel to the WFA Fund Trust, in form and substance reasonably satisfactory to the Selling Fund Trust and dated as of the Closing Date, addressed to the Selling Fund Trust, with respect to the Target Fund that:
(1) The WFA Fund Trust is an open-end, management investment company registered under the 1940 Act;
(2) The execution and delivery of this Plan did not, and the consummation of the Reorganization will not, violate any Material Agreement or any law, rule or regulation to which the WFA Fund Trust is a party or by which it is bound;
(3) The Registration Statement has become effective under the 1933 Act, and to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued by the SEC and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act; and
(4) No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the WFA Fund Trust of the Reorganization, except those that have been obtained under the 1933 Act, the 1934 Act, the 1940 Act and the rules and regulations under those acts, or that may be required under state securities or blue sky laws.
In rendering such opinion, such counsel may (i) rely on the opinion of other counsel to the extent set forth in such opinion, (ii) make assumptions regarding the authenticity, genuineness and/or conformity of documents and copies thereof without independent verification thereof, (iii) limit such opinion to applicable federal and Delaware law, (iv) rely on certificates (reasonably acceptable to the Selling Fund Trust) of officers or Trustees of the WFA Fund Trust, (v) assume that each of this Plan and each Material Agreement is governed by the laws of the State of Delaware or the Commonwealth of Massachusetts.
(g) The Selling Fund Trust shall have received an opinion, dated as of the Closing Date, of Proskauer Rose LLP, upon which each Target Fund and its shareholders may rely based upon factual representations required by Proskauer Rose LLP made in certificates provided to Proskauer Rose LLP by the WFA Fund Trust and Selling Fund Trust, and in a form reasonably satisfactory to the Selling Fund Trust substantially to the effect that, on the basis of existing provisions of the Code, Treasury regulations promulgated thereunder, current administrative rules, pronouncements and court decisions, for federal income tax purposes, the Reorganization will constitute a "reorganization," within the meaning of Section 368(a) of the Code.
(h) There shall not be in effect on the Closing Date any order, judgment, injunction or other decree of any court of competent jurisdiction restraining, enjoining, or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Plan. No action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit or obtain damages or other relief in connection with the Reorganization.
(i) If applicable, the Registration Statement shall have become effective under the 1933 Act, and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. The SEC has not issued any unfavorable advisory report under Section 25(b) of the 1940 Act relating to, or instituted any proceeding seeking to enjoin consummation of, the Reorganization under Section 25(c) of the 1940 Act.
(j) The WFA Fund Trust shall have performed and complied in all material respects with each of its agreements and covenants required by this Plan to be performed or complied with by it prior to or at the Reorganization's Valuation Time and Closing Date.
(k) The Selling Fund Trust shall have received from the WFA Fund Trust a duly executed instrument reasonably acceptable to it whereby the Acquiring Fund assumes its Corresponding Target Fund's Liabilities.
(l) Wells Fargo Funds Management, EIMC and the Board of each WFA Fund Trust and each Evergreen Fund Trust (collectively, the "Addressees") shall have received a letter dated as of the effective date of the Registration Statement from KPMG LLP ("KPMG") addressed to the Addressees with respect to each Target Fund and each Acquiring Fund (that is not a Shell Acquiring Fund) for which KPMG serves as the independent registered public accounting firm in form and substance reasonably satisfactory to the Addressees, that, on the basis of limited procedures reasonably agreed to by the Addressees and described in such letter (but not an examination in accordance with generally accepted auditing standards), describes KPMG's determinations as to whether:
(1) The unaudited pro forma financial statements and pro forma adjustments included in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Target Fund and the Acquiring Fund;
(2) The data utilized in the calculations of the pro forma expense ratios appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Target Fund and the Acquiring Fund; and
(3) The pro forma capitalization tables appearing in the Registration Statement agree to the information set forth in item (1) of this Section 7(l) for the Target Fund and the Acquiring Fund.
(m) With respect to each Shell Reorganization, the Addressees shall have received a letter dated as of the effective date of the Registration Statement from KPMG addressed to them with respect to each Shell Acquiring Fund and its Corresponding Target Fund for which KPMG serves as the independent registered public accounting firm in form and substance reasonably satisfactory to the Addressees, that, on the basis of limited procedures reasonably agreed to by the Addressees and described in such letter (but not an examination in accordance with generally accepted auditing standards), describes KPMG's determinations as to whether:
(1) The data utilized in the calculations of the pro forma expense ratios appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Shell Acquiring Fund and its Corresponding Target Fund; and
(2) The pro forma capitalization tables appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by Wells Fargo Funds Management in respect of a Shell Acquiring Fund and EIMC in respect of its Corresponding Target Fund.
(n) Neither party shall have terminated this Plan with respect to the Reorganization pursuant to Section 10 of this Plan.
(o) The Selling Fund Trust shall have taken all steps required to terminate any agreements with its service providers with respect to the Target Fund and shall have discharged in the normal course of business any and all payment obligations under such agreements prior to or simultaneously with the Reorganization.
(p) In connection with its evaluation of qualified candidates and its independent determination to nominate Michael S. Scofield and K. Dun Gifford to the Board of each WFA Fund Trust and Wells Fargo Master Trust ("WFA Master Trust"), the Board of each WFA Fund Trust and WFA Master Trust shall have taken all action necessary or appropriate to appoint and constitute such nominees duly appointed members of the Board of each such Trust, their service as such to become effective at the Effective Time of any Reorganization with a Closing Date of July 9, 2010 as listed in Annex A, and such action shall be in full force and effect. Simultaneously with the effectiveness of his appointment as a member of the Board of a WFA Fund Trust or WFA Master Trust, each of Messrs. Scofield and Gifford shall resign his service as a member of the Board of all Evergreen Fund Trusts that are open-end management investment companies (for the avoidance of doubt, excluding Asset Allocation Trust).
(q) The Advisory Committee of the Trustees of the Legacy Evergreen Funds shall have been duly established in accordance with the "Charter of the Advisory Committee of the Trustees of the Legacy Evergreen Funds," and the related letter agreement of Wells Fargo Funds Management shall be in full force and effect.
(r) Arrangements reasonably satisfactory to the Board of the Selling Fund Trust shall have been implemented in respect of insurance; deferred compensation; indemnity; pending or threatened litigation, actions, claims, or proceedings of any kind in respect of any of the Evergreen Funds or any of their Trustees or officers; and such other matters as the Board may reasonably determine.
8. Conditions to an Acquiring Fund's Obligations. The obligations of each WFA Fund Trust with respect to each of its series that is an Acquiring Fund in a Reorganization shall be subject to satisfaction of the following conditions precedent, provided however, that Sections 8(e) and 8(f) are conditions precedent only with respect to Reorganizations involving Target Funds that are series of an Evergreen Fund Trust:
(a) The shareholders of the Target Fund shall have approved the Reorganization if and to the extent, and in the manner, required by the Selling Fund Trust's Declaration of Trust or By-Laws and applicable law, or if shareholder approval is otherwise sought by the Selling Fund Trust in respect of the Target Fund. For clarity, the failure of any one Target Fund's shareholders to satisfy this condition shall release the WFA Fund Trust of its obligation under this Plan with respect to the Reorganization involving that Target Fund but not with respect to any other Reorganization.
(b) This Plan and the transactions contemplated by it shall have been approved by the affirmative vote of (i) at least a majority of the Board of the WFA Fund Trust (including a majority of those Trustees who are not "interested persons" of any party to this Plan, as defined in Section 2(a)(19) of the 1940 Act) and (ii) at least a majority of the Board of the Selling Fund Trust (including a majority of those Trustees who are not "interested persons" of any party to this Plan, as defined in Section 2(a)(19) of the 1940 Act). The Selling Fund Trust shall have duly executed and delivered to the Acquiring Fund its Corresponding Target Fund's Reorganization Documents.
(c) All representations and warranties of the Selling Fund Trust made in this Plan that are not by their terms qualified as to materiality shall be true and correct in all material respects, and all representations and warranties of the Selling Fund Trust made in this Plan that by their terms are qualified as to materiality are true and correct in all respects, in each case as if made at and as of the Valuation Time and the Effective Time.
(d) The Selling Fund Trust shall have delivered to the WFA Fund Trust a certificate dated as of the Closing Date and executed in its name by its Secretary or Treasurer (or Assistant Secretary or Assistant Treasurer) stating: 1) that all representations and warranties of the Selling Fund Trust made in this Plan that by their terms are not qualified as to materiality are true and correct in all material respects, and all representations and warranties of the Selling Fund Trust in this Plan that by their terms are qualified as to materiality are true and correct in all respects, in each case at and as of the Valuation Time; and 2) that the Selling Fund Trust with respect to the Target Fund has complied with all of the agreements and covenants to be performed or satisfied by it under this Plan.
(e) The WFA Fund Trust shall have received an opinion of Richards, Layton & Finger, P.A., as special Delaware counsel to the Evergreen Fund Trust, in form and substance reasonably satisfactory to the WFA Fund Trust and dated as of the Closing Date, addressed to the WFA Fund Trust, with respect to the Acquiring Fund, substantially to the effect that:
(1) The Evergreen Fund Trust has been duly formed and is validly existing in good standing as a statutory trust under 12 Del. C. § 3801, et seq. of the Act, and has the power and authority under its Declaration of Trust and the Act to execute, deliver and perform its obligations under this Plan. Under the Act and its Declaration of Trust, the Evergreen Fund Trust has the requisite trust power and authority to own all of its properties and conduct its business all as described in its Declaration of Trust;
(2) Assuming that the shareholders of the Target Fund have duly approved the Reorganization, the execution and delivery of this Plan and the consummation by the Evergreen Fund Trust of the applicable transactions contemplated thereby have been duly authorized by all requisite statutory trust action on the part of the Evergreen Fund Trust under its Declaration of Trust and the Act. Assuming execution and delivery by duly authorized officers of the Evergreen Fund Trust, this Plan has been duly executed and delivered by the Evergreen Fund Trust;
(3) The Evergreen Fund Trust has the power to execute, deliver and perform its obligations under this Plan;
(4) This Plan constitutes a legal, valid and binding agreement of the Evergreen Fund Trust, enforceable against the Evergreen Fund Trust, in accordance with its terms;
(5) The Target Fund that is a series of the Evergreen Fund Trust has been duly established as a separate series under the Evergreen Fund Trust's Declaration of Trust and Section 3806(b)(2) of the Act;
(6) Each Target Class of the Target Fund that is a series of the Evergreen Fund Trust has been duly established as a class of beneficial interests of the Target Fund under the Evergreen Fund Trust's Declaration of Trust and Section 3806(b)(1) of the Act;
(7) Assuming that the shareholders of the Target Fund have duly approved the Reorganization, neither the execution, delivery and performance by the Evergreen Fund Trust of this Plan, nor the consummation by the Evergreen Fund Trust of the applicable transactions contemplated thereby, violates (i) the Declaration of Trust or By-Laws of the Evergreen Fund Trust or (ii) any law, rule or regulation of the State of Delaware applicable to the Evergreen Fund Trust; and
(8) Neither the execution, delivery and performance by Evergreen Fund Trust of this Plan, nor the consummation by such Evergreen Fund Trust of any of the applicable transactions contemplated thereby, requires the consent or approval of, the withholding of objection on the part of, the giving of notice to, the filing, registration or qualification with, or the taking of any other action in respect of, any governmental authority or agency of the State of Delaware.
In rendering such opinion, such counsel may assume all conditions precedent set forth in this Plan have been satisfied and such counsel may include other customary assumptions and qualifications for opinions of this type, including without limitation, customary enforceability assumptions (including the effect of principles of equity, including principles of commercial reasonableness and good faith and fair dealing) and that that the Trustees of the Evergreen Fund Trust have complied with their fiduciary duties in approving this Plan and that the Reorganizations are fair in all respects. In addition, such counsel need not express an opinion with respect to any provisions of this Plan that purport to obligate the Evergreen Fund Trust to cause other persons or entities to take certain actions or act in a certain way insofar as such opinion would relate to the actions of such other persons or entities, any provisions of this Plan to the extent that such provisions purport to bind the Trustees of the Evergreen Fund Trust in the exercise of their fiduciary duties or to bind parties not a signatory to this Plan and any provision of this Plan to the extent such provision relates to the dissolution or liquidation of the Evergreen Fund Trust or series thereof.
(f) The WFA Fund Trust shall have received an opinion of Ropes & Gray LLP, as counsel to the Evergreen Fund Trust, in form and substance reasonably satisfactory to the WFA Fund Trust and dated as of the Closing Date, addressed to the WFA Fund Trust, with respect to the Acquiring Fund, substantially to the effect that:
(1) The Evergreen Fund Trust is an open-end, management investment company registered under the 1940 Act;
(2) The execution and delivery of this Plan did not, and the consummation of the Reorganization will not, violate any Material Agreement or any law, rule or regulation to which the Evergreen Fund Trust is a party or by which it is bound; and
(3) No consent, approval, authorization or order of any court or governmental authority is required for the consummation by the Evergreen Fund Trust of the Reorganization, except those that have been obtained under the 1933 Act, the 1934 Act, the 1940 Act and the rules and regulations under those acts, or that may be required under state securities or blue sky laws, or the HSR Act;
In rendering such opinion, such counsel may (i) rely on the opinion of other counsel to the extent set forth in such opinion, (ii) make assumptions regarding the authenticity, genuineness and/or conformity of documents and copies thereof without independent verification thereof, (iii) limit such opinion to applicable federal and Massachusetts law, (iv) rely on certificates (reasonably acceptable to the WFA Fund Trust) of officers or Trustees of the Evergreen Fund Trust, and (v) assume that each Material Agreement is governed by the laws of the Commonwealth of Massachusetts.
(g) The WFA Fund Trust shall have received an opinion, dated as of the Closing Date, of Proskauer Rose LLP, upon which each Acquiring Fund and its shareholders may rely, based upon factual representations required by Proskauer Rose LLP made in certificates provided to Proskauer Rose LLP by the WFA Fund Trust and the Selling Fund Trust and in a form reasonably satisfactory to the WFA Fund Trust substantially to the effect that, on the basis of existing provisions of the Code, Treasury regulations promulgated thereunder, current administrative rules, pronouncements and court decisions, for federal income tax purposes, the Reorganization will constitute a "reorganization," within the meaning of Section 368(a) of the Code.
(h) There shall not be in effect on the Closing Date any order, judgment, injunction or other decree of any court of competent jurisdiction restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Plan. No action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit or obtain damages or other relief in connection with the Reorganization.
(i) If applicable, the Registration Statement shall have become effective under the 1933 Act, and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. The SEC has not issued any unfavorable advisory report under Section 25(b) of the 1940 Act relating to, or instituted any proceeding seeking to enjoin consummation of, the Reorganization under Section 25(c) of the 1940 Act.
(j) The Selling Fund Trust shall have performed and complied in all material respects with each of its agreements and covenants required by this Plan to be performed or complied with by it prior to or at the Reorganization's Valuation Time and Closing Date.
(k) The Addressees shall have received a letter dated as of the effective date of the Registration Statement from KPMG addressed to the Addressees with respect to each Target Fund and each Acquiring Fund (that is not a Shell Acquiring Fund) for which KPMG serves as the independent registered public accounting firm in form and substance reasonably satisfactory to the Addressees that, on the basis of limited procedures reasonably agreed to by the Addressees and described in such letter (but not an examination in accordance with generally accepted auditing standards), describes KPMG's determinations as to whether:
(1) The unaudited pro forma financial statements and pro forma adjustments included in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Target Fund and the Acquiring Fund;
(2) The data utilized in the calculations of the pro forma expense ratios appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Target Fund and the Acquiring Fund; and
(3) The pro forma capitalization tables appearing in the Registration Statement agree to the information set forth in item (1) of this Section 8(k) for the Target Fund and the Acquiring Fund.
(l) With respect to each Shell Reorganization, the Addressees shall have received a letter dated as of the effective date of the Registration Statement from KPMG addressed to them with respect to each Shell Acquiring Fund and its Corresponding Target Fund for which KPMG serves as the independent registered public accounting firm in form and substance reasonably satisfactory to the Addressees that, on the basis of limited procedures reasonably agreed to by the Addressees and described in such letter (but not an examination in accordance with generally accepted auditing standards) describes KPMG's determinations as to whether:
(1) The data utilized in the calculations of the pro forma expense ratios appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by the Addressees in respect of the Shell Acquiring Fund and its Corresponding Target Fund; and
(2) The pro forma capitalization tables appearing in the Registration Statement materially agree to the underlying accounting records or with written estimates provided by Wells Fargo Funds Management in respect of a Shell Acquiring Fund and EIMC in respect of its Corresponding Target Fund.
(m) Except to the extent prohibited by law, and unless, in the opinion of Proskauer Rose LLP, a Target Fund's Reorganization constitutes a "reorganization" within the meaning of Section 368(a)(1)(F) of the Code prior to the Valuation Time, each Target Fund shall have declared a dividend or dividends, with a record date and ex-dividend date prior to the Valuation Time, which, together with all previous dividends, shall have the effect of distributing to the Target Fund shareholders, with respect to taxable periods or years ending on or before the Effective Time for which the Target Fund is eligible to take a deduction for dividends paid, all of its previously undistributed (i) "investment company taxable income" within the meaning of Section 852(b) of the Code (determined without regard to Section 852(b)(2)(D) of the Code), (ii) amounts constituting the excess of (A) the amount specified in Section 852(a)(1)(B)(i) of the Code over (B) the amount specified in Section 852(a)(1)(B)(ii) of the Code, and (iii) net capital gain (within the meaning of Section 1222(11) of the Code), if any.
(n) Neither party shall have terminated this Plan with respect to the Reorganization pursuant to Section 10 of this Plan.
(o) The Selling Fund Trust shall have taken all steps required to terminate any agreements with its service providers with respect to the Target Fund and shall have discharged in the normal course of business any and all payment obligations under such agreements prior to or simultaneously with the Reorganization.
(p) The Selling Fund Trust shall have delivered to the WFA Fund Trust, or shall have made provision for delivery as promptly as practicable after the Effective Time of, a statement, accurate and complete in all material respects, of (i) Assets of the Target Fund, showing the tax basis of such Assets for federal income tax purposes by lot and the holding periods of such Assets for such purposes, as of the Valuation Time; (ii) the capital loss carryforwards for each Target Fund for federal income tax purposes and the taxable year(s) of the Target Fund (or its predecessors) in which such capital losses were recognized; (iii) any limitations on the use of such losses imposed under Section 382 of the Code (determined without regard to the transactions contemplated by this Plan); (iv) any unrealized gain or loss in such Assets (as determined as of the Valuation Time) for federal income tax purposes; (v) the tax books and records of each Target Fund for preparing any tax returns required by law to be filed after the Closing Date; and (vi) such other tax information reasonably requested by the WFA Fund Trust.
9. Tax Matters. Except where otherwise required by law, the parties shall not take a position on any tax returns inconsistent with the treatment of each Reorganization for tax purposes as a "reorganization," within the meaning of Section 368(a) of the Code and each Acquiring Fund and the Corresponding Target Fund will comply with the record keeping and information filing requirements of Section 1.368-3 of the Treasury Regulation in accordance therewith.
10. Termination of Plan. The Board of either a Selling Fund Trust or a WFA Fund Trust, as the case may be, may terminate this Plan with respect to any Reorganization, by majority vote, upon notice to the other party, if: (i) the conditions precedent set forth in Sections 7 or 8, as the case may be, are not satisfied on the Closing Date; (ii) it becomes reasonably apparent to such Board that such conditions precedent will not be satisfied by the Effective Time; or (iii) it determines that the consummation of the Reorganization is not in the best interests of the shareholders of any of its participating Funds. The termination of this Plan with respect to any Reorganization shall not affect the continued effectiveness of this Plan with respect to any other Reorganization. No Trust or Fund or any Trustee, officer, or agent of any thereof shall incur any liability or other obligation, by way of damages or otherwise, for any determination by its Board not to consummate any Reorganization for any reason or for any breach of any provision of this Agreement that results in such Reorganization not being consummated.
11. Governing Law. This Plan and the transactions contemplated hereby shall be governed, construed and enforced in accordance with the laws of the State of Delaware, except to the extent preempted by federal law, without regard to conflicts of law principles.
12. Amendments. The parties may, by written agreement, amend this Plan or any annex or schedule to this Plan with respect to any Reorganization at any time, including, with respect to any Target Fund whose shareholders are being asked to approve the Reorganization, before or after such Target Fund's shareholders approve of the Reorganization; provided, however, that, after approval of this Plan by shareholders of the Target Fund, the parties may not amend this Plan in a manner that the Board of the Selling Fund Trust determines materially adversely affects the interests of the Target Fund's shareholders with respect to that Reorganization. This section shall not preclude the parties from changing the Valuation Time, Closing Date or the Effective Time of a Reorganization.
13. Waivers. At any time prior to the Effective Time, a WFA Fund Trust or a Selling Fund Trust may by written instrument signed by it (i) waive the effect of any inaccuracies in the representations and warranties made to it herein or (ii) waive compliance with any of the agreements, covenants or conditions made for its benefit contained herein. Each WFA Fund Trust and Selling Fund Trust agree that any waiver shall apply only to the particular inaccuracy or requirement for compliance waived, and not any other or future inaccuracy or lack of compliance.
14. Limitation on Liabilities. The obligations of a WFA Fund Trust or a Selling Fund Trust shall not bind any of the Trustees, shareholders, nominees, officers, agents, or employees of the WFA Fund Trust or the Selling Fund Trust personally, but shall bind only the Assets and property of the particular Fund, in respect of which the obligations arise. The execution and delivery of this Plan by the parties' officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the Assets and the property of the Acquiring Fund or the Target Fund, as appropriate.
Each of the parties hereby acknowledges that use of this form of agreement, governing multiple Reorganizations by various Funds, is for ease of administration only, and it is hereby acknowledged and agreed that by executing this Plan each WFA Fund Trust and each Selling Fund Trust shall be deemed to have entered into and executed a separate agreement with respect to each of its Funds separately with the other Fund(s) (and only such other Fund(s)) with which this Plan contemplates it will enter into a Reorganization, Wells Fargo Funds Management, and EIMC, each such agreement containing terms and provisions identical to those contained in this Plan, and without reference to any other entity. Notwithstanding any other provision of this Plan, each Reorganization shall for all purposes be and be deemed to be entered into between the entities named on Annex A as parties to such Reorganization, Wells Fargo Funds Management, and EIMC, and no other person or entity, whether listed on Annex A or not, shall have any obligation or incur any liability in respect of such Reorganization. For clarity and without limiting the foregoing, where a series of shares of a Trust is a party to a Reorganization, the obligations under this Plan of such series (or of the Trust with respect to such series) in respect of such Reorganization shall be those of such series alone, and shall not be obligations of or binding on (or satisfied out of the assets of) the Trust generally or any other series of the Trust.
15. Indemnification. Each WFA Fund Trust with respect to each of its series that is an Acquiring Fund agrees to indemnify and hold harmless each of the Corresponding Target Funds of an Evergreen Fund Trust, the Trustees of the Evergreen Fund Trust of which it is a series, and the officers and agents of such Evergreen Fund Trust (each, an "Indemnified Party" and collectively, the "Indemnified Parties") against any and all losses, claims, damages, liabilities, and reasonable expenses at any time imposed upon or reasonably incurred by any one or more of the Indemnified Parties in connection with, arising out of, or resulting from any action, suit, or other proceeding, whether civil, administrative, regulatory, or criminal, before any court or administrative or legislative body, in which any one or more of the Indemnified Parties may be involved or with which any one or more of the Indemnified Parties may be threatened by reason of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus/Proxy Statement, the Acquiring Fund's prospectus or statement of additional information, or any amendment or supplement to any thereof, or arising out of, or based upon, the omission or alleged omission to state in any of the foregoing a material fact required to be stated therein or necessary to make the statements therein not misleading, including without limitation any amounts paid by any one or more of the Indemnified Parties in a compromise or settlement of any such claim, action, suit, or proceeding, or threatened claim, action, suit, or proceeding made with the consent of Acquiring Fund, such consent not to be unreasonably withheld; unless such statement or omission was made based on and in accordance with information furnished by the Indemnified Party in respect of a Target Fund in writing (including by any electronic communication) for use in the Registration Statement. An Indemnified Party will notify the Acquiring Fund in writing within thirty days after the receipt by such Indemnified Party of any notice of legal process or any suit brought against or claim made against such Indemnified Party as to any matters covered by this Section 15. Each WFA Fund Trust with respect to each of its series that is an Acquiring Fund shall be entitled to participate at its own expense in the defense of any action, suit, or other proceeding covered by this Section 15, or, if it so elects, to assume at its expense by counsel satisfactory to the Indemnified Parties in question the defense of any such action, suit, or other proceeding, and, if the WFA Fund Trust with respect to the Acquiring Fund elects to assume such defense, the Indemnified Parties shall be entitled to participate in the defense of any such action, suit, or other proceeding at their own expense (except as provided below in this paragraph). Notwithstanding the foregoing, counsel selected by an Indemnified Party shall conduct the defense of such Indemnified Party to the extent reasonably determined by such counsel to be necessary to protect the interests of the Indemnified Party, and the WFA Fund Trust shall indemnify the Indemnified Party for the expenses of such defense, if (1) the Indemnified Party reasonably determines that there may be a conflict between the positions of the Indemnified Party and the positions of any other Indemnified Party or other parties to the action, suit or other proceeding that are indemnified by the WFA Fund Trust or any of its affiliates and not represented by separate counsel, or the Indemnified Party otherwise reasonably concludes that representation of both the Indemnified Party and any such other Indemnified Parties or other parties by the same counsel would not be appropriate, or (2) the action, suit or proceeding involves the Indemnified Party, but not the WFA Fund Trust nor any such other Indemnified Party or other party who is indemnified by the WFA Fund Trust or any of its affiliates, and the Indemnified Party reasonably withholds consent to being represented by counsel selected by the WFA Fund Trust. If the WFA Fund Trust shall not have elected to assume the defense of any such action, suit or proceeding for an Indemnified Party within thirty days after receiving written notice thereof from the Indemnified Party, the WFA Fund Trust shall be deemed to have waived any right it might otherwise have to assume such defense.
Each WFA Fund Trust's obligation with respect to any of its series that is an Acquiring Fund under this Section 15 to indemnify and hold harmless the Indemnified Parties constitutes a guarantee of payment so that the WFA Fund Trust with respect to that Acquiring Fund will pay in the first instance any losses, claims, damages, liabilities, and reasonable expenses required to be paid by it under this Section 15 without the necessity of the Indemnified Parties' first paying the same. Each WFA Fund Trust with respect to each of its series that is an Acquiring Fund will promptly pay all expenses, including without limitation accountants' and counsel fees, incurred by an Indemnified Party from time to time in the defense or investigation of any action, suit, or other proceeding, whether civil, administrative, regulatory, or criminal, before any court or administrative or legislative body, upon demand by such Indemnified Party in advance of the final disposition of any such action, suit, or other proceeding; provided that the Indemnified Party shall have undertaken to repay the amounts so paid to him or her if it is ultimately determined by a court of competent jurisdiction upon a final, non-appealable adjudication that indemnification of such expenses is not authorized under this Section 15. The phrase "action, suit, or other proceeding, whether civil, administrative, regulatory, or criminal, before any court or administrative or legislative body," wherever used in this Section 15, includes without limitation any threatened, pending, or completed claim, demand, threat, discovery request, request for testimony or information, action, suit, arbitration, alternative dispute mechanism, review, hearing, or any formal or informal inquiry, exam, inspection, audit, or investigation, or any other proceeding, including any appeal from any of the foregoing, whether civil, criminal, administrative, regulatory, or investigative, and whether by or on behalf of any court, the SEC, or any other federal, state, or other governmental, regulatory, or administrative body, authority, or agency, or any self-regulatory organization, of any kind.
Notwithstanding the foregoing, nothing contained within this section or elsewhere in this Plan shall permit the payment of any indemnification of any Indemnified Party in respect of any matter as to which (and then only to the extent that) such Indemnified Party shall have been finally adjudicated in such action, suit, or other proceeding (such adjudication not being subject to appeal) to be liable to the Evergreen Fund in question or its shareholders by reason of such Indemnified Party's willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of such Indemnified Party's office.
16. Notices. Any notice, report, statement, certificate or demand required or permitted by any provision of this Plan shall be in writing and shall be sent by a reputable overnight express carrier, or by registered or certified mail, postage prepaid, addressed as follows or to such other address of which the parties may have given notice:
For each Evergreen Fund Trust with respect to any Target Fund of an Evergreen Fund Trust:
Evergreen Investment Management Company
200 Berkeley Street,
Boston, Massachusetts 02116
Attn.: Legal Department
With a copy (which will not constitute notice) sent at the same time and by the same means to:
Ropes & Gray LLP
One International Place
Boston, MA 02110-2624
Attention: Timothy W. Diggins
For each WFA Fund Trust with respect to any Acquiring Fund and any Target Fund of a WFA Fund Trust:
Karla M. Rabusch, President
Wells Fargo Funds Trust
Wells Fargo Variable Trust
525 Market Street, 12th Floor
San Francisco, CA 94105
With a copy (which will not constitute notice) sent at the same time and by the same means to:
C. David Messman, Secretary
Wells Fargo Funds Trust
Wells Fargo Variable Trust
45 Fremont Street, 26th Floor
San Francisco, CA 94105
17. Expenses. EIMC and Wells Fargo Funds Management hereby agree, jointly and severally, to bear all expenses incurred by any party hereto that are not otherwise borne by an affiliated person of EIMC or Wells Fargo Funds Management (which affiliated persons do not include any Fund of a WFA Fund Trust or an Evergreen Fund Trust) in connection with the Reorganization and with this Plan (other than any brokerage or other transaction costs associated with the sale or purchase of portfolio securities in connection with the Reorganization), whether or not the Reorganization is consummated. Notwithstanding the foregoing, expenses will in any event be paid by the party directly incurring them if and to the extent that the payment by another party of such costs and expenses would result in the disqualification of such party as a "regulated investment company" within the meaning of Section 851 of the Code.
18. General. This Plan supersedes all prior agreements between the parties (written or oral), is intended as a complete and exclusive statement of the terms of the agreement between the parties and may not be changed or terminated orally. The parties may execute this Plan in counterparts, which shall be considered one and the same agreement and shall become effective when the counterparts have been executed by and delivered to all the parties. The headings contained in this Plan are for reference only and shall not affect in any way the meaning or interpretation of this Plan. Nothing in this Plan, expressed or implied, confers upon any other person any rights or remedies under or by reason of this Plan. Neither party may assign or transfer any right or obligation under this Plan without the written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers designated below to execute this Plan as of the date first written above.
WELLS FARGO FUNDS TRUST
WELLS FARGO VARIABLE TRUST
for themselves and with respect to the Acquiring Funds and the Target Funds that are their series as listed in Annex A:
ATTEST:
By: /s/ C. David Messman
Name: C. David Messman
Title: Secretary
By: /s/ Kasey Phillips
Name: Kasey Phillips
Title: Treasurer
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers designated below to execute this Plan as of the date first written above.
EVERGREEN FUND TRUST,
EVERGREEN EQUITY TRUST
EVERGREEN FIXED INCOME TRUST
EVERGREEN INTERNATIONAL TRUST
EVERGREEN MONEY MARKET TRUST
EVERGREEN MUNICIPAL TRUST
EVERGREEN SELECT EQUITY TRUST
EVERGREEN SELECT FIXED INCOME TRUST
EVERGREEN SELECT MONEY MARKET TRUST
EVERGREEN VARIABLE ANNUITY TRUST
for themselves and with respect to the Target Funds that are their series as listed in Annex A:
ATTEST:
By: /s/ Michael H. Koonce /s/ W. Douglas Munn Name: Michael H. Koonce Name: W. Douglas Munn
Title: Secretary Title: President
WELLS FARGO FUNDS MANAGEMENT, LLC (a party to this Plan as to Section 17 only)
ATTEST:
By: /s/ C. David Messman
Name: C. David Messman
Title: Secretary
By: /s/ Erdem Cimen
Name: Erdem Cimen
Title: Senior Vice President
EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC
(a party to this Plan as to Section 17 only)
ATTEST:
By: /s/ Michael H. Koonce /s/ W. Douglas Munn
Name: Michael H. Koonce Name: W. Douglas Munn
Title: Secretary Title: Executive Managing Director
ANNEX A
ACTIVE REORGANIZATION TABLE | ||||
Target Fund | Acquiring Fund | Closing Date | ||
Evergreen Fundamental Mid Cap Value Fund | Mid Cap Disciplined Fund (to be renamed Special Mid Cap Value Fund) Class A Class A Class C Institutional Class | July 16, 2010 July 16, 2010 | ||
Evergreen Mid Cap Growth Fund | Mid Cap Growth Fund Class A Class B Class C Institutional Class | July 16, 2010 July 16, 2010 | ||
Evergreen International Equity Fund | International Core Fund (to be renamed International Equity Fund) Class A Class B Class C Institutional Class (new class) Class R (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Short-Intermediate Municipal Bond Fund | Short-Term Municipal Bond Fund Class A Class A Class C Class A | July 9, 2010 July 9, 2010 | ||
Evergreen Intermediate Municipal Bond Fund | Intermediate Tax/AMT-Free Fund Class A Class A Class C Administrator Class Class A | July 9, 2010 July 9, 2010 | ||
Evergreen High Income Municipal Bond Fund | Municipal Bond Fund Class A Class B Class C Administrator Class | July 9, 2010 July 9, 2010 | ||
Evergreen Municipal Bond Fund | Municipal Bond Fund Class A Class B Class C Institutional Class | July 9, 2010 July 9, 2010 | ||
Evergreen California Municipal Bond Fund | California Tax-Free Fund Class A Class B Class C Administrator Class | July 9, 2010 July 9, 2010 | ||
WFA Strategic Income Fund | High Income Fund Class A Class B Class C | July 9, 2010 July 9, 2010 | ||
Evergreen Core Plus Bond Fund | Income Plus Fund Class A Class B Class C Institutional Class | July 9, 2010 July 9, 2010 | ||
Evergreen U.S. Government Fund | Government Securities Fund Class A Class B Class C Administrator Class | July 9, 2010 July 9, 2010 | ||
Evergreen Municipal Money Market Fund | Municipal Money Market Fund Class A (new class) Service Class (new class) Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Institutional 100% Treasury Money Market Fund | 100% Treasury Money Market Fund Administrator Class (new class) Service Class | July 9, 2010 July 9, 2010 | ||
Evergreen Treasury Money Market Fund | Treasury Plus Money Market Fund Class A Service Class Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Institutional Treasury Money Market Fund | Treasury Plus Money Market Fund Institutional Class Institutional Class Service Class Institutional Class Service Class | July 9, 2010 July 9, 2010 | ||
Evergreen U.S. Government Money Market Fund | Government Money Market Fund Class A Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Institutional U.S. Government Money Market Fund | Government Money Market Fund Institutional Class Service Class Institutional Class Service Class | July 9, 2010 July 9, 2010 | ||
Evergreen Prime Cash Management Money Market Fund | Heritage Money Market Fund Institutional Class Institutional Class Service Class (new class) Institutional Class Service Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Institutional Money Market Fund | Heritage Money Market Fund Institutional Class Institutional Class Service Class (new class) Institutional Class Service Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Money Market Fund | Money Market Fund Class A Class B Class C (new class) Service Class (new class) Daily Class (new class) | July 9, 2010 July 9, 2010 | ||
WFA Overland Express Sweep | Money Market Fund Daily Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen VA Core Bond Fund | VT Total Return Bond Fund N/A Class 2 (formerly unnamed class) | July 16, 2010 July 16, 2010 | ||
Evergreen VA Special Values Fund | VT Small/Mid Cap Value Fund (to be renamed VT Small Cap Value Fund) Class 1 (new class) Class 2 (formerly unnamed class) | July 16, 2010 July 16, 2010 | ||
Evergreen VA Growth Fund | VT Small Cap Growth Fund Class 1 (new class) Class 2 (formerly unnamed class) | July 16, 2010 July 16, 2010 | ||
Evergreen VA International Equity Fund | VT International Core Fund (to be renamed VT International Equity Fund) Class 1 (new class) Class 2 (formerly unnamed class) | July 16, 2010 July 16, 2010 | ||
WFA Diversified Bond Fund | Total Return Bond Fund Administrator Class | July 9, 2010 July 9, 2010 | ||
WFA Aggressive Allocation Fund | Growth Balanced Fund Administrator Class | July 16, 2010 July 16, 2010 | ||
WFA Growth Equity Fund | Diversified Equity Fund Class A Class B Class C Administrator Class Administrator Class | July 16, 2010 July 16, 2010 | ||
WFA Large Cap Appreciation Fund | Capital Growth Fund Class A Class A Class C Administrator Class Institutional Class | July 16, 2010 July 16, 2010 | ||
WFA Stable Income Fund | Ultra Short-Term Income Fund Class A Class A Class C Administrator Class | July 9, 2010 July 9, 2010 | ||
Evergreen California Municipal Money Market Fund | California Municipal Money Market Fund Class A Service Class Sweep Class (new class) | July 9, 2010 July 9, 2010 |
SHELL REORGANIZATION TABLE | ||||
Target Fund | Acquiring Fund | Closing Date | ||
Evergreen Equity Income Fund | Classic Value Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) Class R (new class) | July 16, 2010 July 16, 2010 | ||
WFA Specialized Financial Services Fund | Classic Value Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Disciplined Value Fund | Disciplined Value Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
WFA Equity Income Fund | Disciplined Value Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
WFA U.S. Value Fund | Disciplined Value Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) Investor Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Golden Large Cap Core Fund | Large Cap Core Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
WFA Large Company Core Fund | Large Cap Core Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) Investor Class (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Large Company Growth Fund | Premier Large Company Growth Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
WFA Large Company Growth Fund | Premier Large Company Growth Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) Investor Class (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Special Values Fund | Special Small Cap Value Fund (New Shell) Class A (new class) Class B (new class) Class C(new class) Administrator Class (new class) Class A (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Small Cap Value Fund | Special Small Cap Value Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Emerging Markets Growth Fund | Emerging Markets Equity Fund II (New Shell) (to be renamed Emerging Markets Equity Fund) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
WFA Emerging Markets Equity Fund | Emerging Markets Equity Fund II (New Shell) (to be renamed Emerging Markets Equity Fund) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen VA Omega Fund | VT Omega Growth Fund (New Shell) Class 1 (new class) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
WFA VT Large Company Growth Fund | VT Omega Growth Fund (New Shell) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen VA Fundamental Large Cap Fund | VT Core Equity Fund (New Shell) Class 1 (new class) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
WFA VT Large Company Core Fund | VT Core Equity Fund (New Shell) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
WFA VT Equity Income Fund | VT Intrinsic Value Fund (New Shell) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
WFA VT C&B Large Cap Value Fund | VT Intrinsic Value Fund (New Shell) Class 2 (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Intrinsic Value Fund | Intrinsic Value Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Enhanced S&P 500 Fund | Disciplined U.S. Core Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) Class A (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Fundamental Large Cap Fund | Core Equity Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Omega Fund | Omega Growth Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) Class R (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Golden Core Opportunities Fund | Small/Mid Cap Core Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Global Large Cap Equity Fund | Disciplined Global Equity Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Global Opportunities Fund | Global Opportunities Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Intrinsic World Equity Fund | Intrinsic World Equity Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Strategic Municipal Bond Fund | Strategic Municipal Bond Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen North Carolina Municipal Bond Fund | North Carolina Tax-Free Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Institutional Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Pennsylvania Municipal Bond Fund | Pennsylvania Tax-Free Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Adjustable Rate Fund | Adjustable Rate Government Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) Class A (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen International Bond Fund | International Bond Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) Class A (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen New Jersey Municipal Money Market Fund | New Jersey Municipal Money Market Fund (New Shell) Class A (new class) Service Class (new class) Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen New York Municipal Money Market Fund | New York Municipal Money Market Fund (New Shell) Class A (new class) Service Class (new class) Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Pennsylvania Municipal Money Market Fund | Pennsylvania Municipal Money Market Fund (New Shell) Class A (new class) Service Class (new class) Sweep Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Health Care Fund | Health Care Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Precious Metals Fund | Precious Metals Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Utility & Telecommunications Fund | Utility & Telecommunications Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Asset Allocation Fund | Asset Allocation Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) Class R (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Diversified Capital Builder Fund | Diversified Capital Builder Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Diversified Income Builder Fund | Diversified Income Builder Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Institutional Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Strategic Growth Fund | Strategic Large Cap Growth Fund (New Shell) Class A (new class) Class A (new class) Class C (new class) Institutional Class (new class) Class A (new class) Class R (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Institutional Municipal Money Market Fund | Municipal Cash Management Money Market Fund (New Shell) Institutional Class (new class) Institutional Class (new class) Service Class (new class) Institutional Class (new class) Service Class (new class) | July 9, 2010 July 9, 2010 | ||
Evergreen Growth Fund | Traditional Small Cap Growth Fund (New Shell) Class A (new class) Class A (new class) Class A (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen Small-Mid Growth Fund | Growth Opportunities Fund (New Shell) Class A (new class) Institutional Class (new class) | July 16, 2010 July 16, 2010 | ||
Evergreen High Income Fund | High Yield Bond Fund (New Shell) Class A (new class) Class B (new class) Class C (new class) Administrator Class (new class) | July 9, 2010 July 9, 2010 |
SCHEDULE A
MATERIAL AGREEMENTS
The following agreements shall be Material Agreements:
For the WFA Fund Trusts:
Amended and Restated Declaration of Trust of the Wells Fargo Funds Trust dated March 10, 1999, and amended and restated on March 26, 1999, August 19, 1999, November 5, 2002 and February 8, 2005.
Amended and Restated Declaration of Trust of the Wells Fargo Variable Trust dated March 10, 1999, and amended and restated on March 26, 1999, August 19, 1999, November 5, 2002 and February 8, 2005.
Amended and Restated Investment Advisory Agreement between Wells Fargo Funds Management, LLC ("Wells Fargo Funds Management") and Wells Fargo Funds Trust, dated August 6, 2003, and amended October 1, 2005 and March 27, 2009, with Schedule A amended March 27, 2009.
Amended and Restated Investment Advisory Agreement between Wells Fargo Funds Management and Wells Fargo Variable Trust, dated August 6, 2003, and amended October 1, 2005, with Schedule A amended March 28, 2008.
Amended and Restated Investment Sub-Advisory Contract among Wells Capital Management Incorporated, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated March 1, 2001, with Schedule A amended August 12, 2009.
Amended and Restated Investment Sub-Advisory Contract among Wells Capital Management Incorporated, Wells Fargo Funds Management and Wells Fargo Variable Trust, dated March 1, 2001, with Schedule A amended February 8, 2006.
Investment Sub-Advisory Contract among Artisan Partners Limited Partnership, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated February 1, 2005, with Appendix A dated February 1, 2005 and Appendix B amended on November 8, 2005.
Investment Sub-Advisory Contract among Cooke & Bieler, L.P., Wells Fargo Funds Management and Wells Fargo Funds Trust, dated March 24, 2004, with Appendix A amended July 18, 2008.
Investment Sub-Advisory Contract among Cooke & Bieler, L.P., Wells Fargo Funds Management and Wells Fargo Variable Trust, dated February 1, 2005, with Appendix A and Appendix B amended February 8, 2006.
Investment Sub-Advisory Contract among Evergreen Investment Management Company, LLC, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated March 2, 2009, with Appendix A and Appendix B dated March 2, 2009.
Investment Sub-Advisory Contract among Evergreen Investment Management Company, LLC, Wells Fargo Funds Management and Wells Fargo Variable Trust, dated March 2, 2009, with Appendix A and Appendix B dated March 2, 2009.
Investment Sub-Advisory Contract among Global Index Advisors, Inc., Wells Fargo Funds Management and Wells Fargo Funds Trust, dated June 26, 2006, with Appendix A amended February 7, 2007 and Appendix B amended August 12, 2009.
Investment Sub-Advisory Contract among LSV Asset Management, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated February 1, 2005, with Appendix A and Appendix B dated February 1, 2005.
Investment Sub-Advisory Contract among Matrix Asset Advisors, Inc., Wells Fargo Funds Management and Wells Fargo Funds Trust, dated April 11, 2005, with Appendix A amended December 1, 2007 and Schedule A amended December 1, 2007.
Investment Sub-Advisory Contract among Matrix Asset Advisors, Inc., Wells Fargo Funds Management and Wells Fargo Variable Trust, dated February 1, 2005, with Appendix A amended February 8, 2006 and Schedule A amended February 8, 2006.
Investment Sub-Advisory Contract among Nelson Capital Management, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated October 1, 2008, with Appendix A and Appendix B dated October 1, 2008.
Investment Sub-Advisory Contract among Peregrine Capital Management, Inc., Wells Fargo Funds Management and Wells Fargo Variable Trust, dated March 1, 2001, with Appendix A amended February 8, 2006 and Schedule A amended May 9, 2007.
Investment Sub-Advisory Contract among Phocas Financial Corporation, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated March 21, 2008, with Appendix A and Appendix B dated March 21, 2008.
Investment Sub-Advisory Contract among Dresdner RCM Global Investors LLC, Wells Fargo Funds Management and Wells Fargo Funds Trust, dated October 29, 2001, with Appendix A amended January 26, 2008 and Schedule A dated January 26, 2008.
Investment Sub-Advisory Contract among Schroder Investment Management North America, Inc., Wells Fargo Funds Management and Wells Fargo Funds Trust, dated March 1, 2001, with Appendix A and Schedule A dated May 1, 2003.
Amended and Restated Accounting Services Agreement and Amended and Restated Letter Agreement among Wells Fargo Funds Trust, Wells Fargo Master Trust, Wells Fargo Variable Trust and PFPC, Inc., each dated May 10, 2006, including Exhibit A amended June 2, 2009 and Exhibit B.
Administration Agreement between Wells Fargo Funds Management and Wells Fargo Funds Trust dated March 1, 2003, with Appendix A amended August 6, 2008 and Schedule A amended August 12, 2009.
Administration Agreement between Wells Fargo Funds Management and Wells Fargo Variable Fund Trust dated March 1, 2003, with Appendix A amended February 8, 2006.
Master Custodian Agreement among State Street Bank, N.A. and Wells Fargo Funds Trust, Wells Fargo Master Trust and Wells Fargo Variable Trust dated August 10, 2009, with Appendix A and Schedules A, B, C and D.
Distribution Agreement between Wells Fargo Funds Distributor, LLC and Wells Fargo Funds Trust, dated April 8, 2005, with Schedule I amended August 12, 2009.
Distribution Agreement between Wells Fargo Funds Distributor, LLC and Wells Fargo Variable Trust, dated April 8, 2005, with Schedule I amended February 8, 2006.
Distribution Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 approved by the Wells Fargo Funds Trust Board on March 28, 2008, with Appendix A amended June 2, 2009.
Distribution Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 approved by the Wells Fargo Variable Trust Board on March 28, 2008, with Appendix A amended February 8, 2006.
Expense Assumption Agreement between Wells Fargo Funds Trust and Wells Fargo Funds Management dated February 29, 2008, with Schedule A.
Amended and Restated Fee and Expense Agreement among Wells Fargo Funds Trust, Wells Fargo Master Trust and Wells Fargo Funds Management, dated October 3, 2008, with Schedule A amended August 12, 2009.
Amended and Restated Fee and Expense Agreement between Wells Fargo Variable Trust and Wells Fargo Funds Management, dated October 3, 2008, with Schedule A.
Shareholder Servicing Plan approved by the Board of Wells Fargo Fund Trust on March 27, 2009, with Appendix A amended June 2, 2009.
Amended and Restated Joint Fidelity Bond Allocation Agreement between Wells Fargo Funds Trust, Wells Fargo Master Trust, Wells Fargo Variable Trust amended and restated on May 1, 2006, with Appendix A amended November 14, 2008.
Rule 18f-3 Multi-Class Plan approved by the Board of Wells Fargo Funds Trust on March 26, 1999 and amended August 6, 2008, with Appendix A amended June 2, 2009 and Appendix B amended March 28, 2008.
Amended and Restated Securities Lending Agreement between Wells Fargo Funds Trust, Wells Fargo Master Trust, Wells Fargo Variable Trust, Wells Fargo Funds Management and Wells Fargo Bank, N.A. amended and restated on November 1, 2008, with accompanying schedules and Letter regarding Account Revenues dated September 1, 2007.
Transfer Agency and Service Agreement among Boston Financial Data Services, Inc., Wells Fargo Funds Trust and Wells Fargo Variable Trust, dated April 11, 2005, amended on December 18, 2007 and Schedule A amended December 1, 2009.
For the Evergreen Fund Trusts:
EVERGREEN EQUITY TRUST
With respect to Evergreen Asset Allocation Fund, Evergreen Disciplined Value Fund, Evergreen Diversified Capital Builder Fund, Evergreen Enhanced S&P 500 Fund, Evergreen Equity Income Fund, Evergreen Fundamental Large Cap Fund, Evergreen Fundamental Mid Cap Value Fund, Evergreen Golden Core Opportunities Fund, Evergreen Golden Large Cap Core Fund, Evergreen Growth Fund, Evergreen Health Care Fund, Evergreen Intrinsic Value Fund, Evergreen Large Company Growth Fund, Evergreen Mid Cap Growth Fund, Evergreen Omega Fund, Evergreen Small Cap Value Fund, Evergreen Small-Mid Growth Fund, Evergreen Special Values Fund, and Evergreen Utility & Telecommunication Fund
Advisory Agreements
Investment Advisory and Management Agreement between Evergreen Equity Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009, with respect to Evergreen Asset Allocation Fund, Evergreen Diversified Capital Builder Fund, Evergreen Disciplined Value Fund, Evergreen Enhanced S&P 500® Fund, Evergreen Equity Income Fund, Evergreen Fundamental Large Cap Fund, Evergreen Growth Fund, Evergreen Health Care Fund, Evergreen Large Company Growth Fund, Evergreen Mid Cap Growth Fund, Evergreen Omega Fund, Evergreen Small Cap Value Fund, Evergreen Special Values Fund and Evergreen Utility & Telecommunications Fund)
Investment Advisory and Management Agreement between Evergreen Equity Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009, with respect to Evergreen Small-Mid Growth Fund, Evergreen Intrinsic Value Fund, Evergreen Fundamental Mid Cap Value Fund, Evergreen Golden Core Opportunities Fund, and Evergreen Golden Large Cap Core Fund)
Underwriting Agreements
Principal Underwriting Agreement between Evergreen Equity Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Principal Underwriting Agreement between Evergreen Equity Trust and Kokusai Securities Company Limited (dated 1/23/1998)
Principal Underwriting Agreement between Evergreen Equity Trust and Nomura Securities Company (dated 1/23/1998)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Equity Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended 10/18/1999 (with respect to Evergreen Growth Fund), 7/6/2000, 6/29/2001, 6/14/2002 (with respect to Evergreen Special Values Fund), 9/11/2002 (with respect to Evergreen Asset Allocation Fund), 3/7/2005 (with respect to Evergreen Disciplined Value Fund), 10/1/2005 (with respect to Evergreen Small-Mid Growth Fund), 10/12/2005 (with respect to Evergreen Small-Mid Growth Fund), 1/19/2006, 12/7/2006, 7/16/2007 (with respect to Evergreen Fundamental Mid Cap Value Fund), and 12/10/2007 (with respect to Evergreen Golden Core Opportunities Fund and Evergreen Golden Large Cap Core Fund))
Amended Pricing Schedule to Custodian Agreement (dated 12/19/2006)
Remote Access Services Agreement between Evergreen Equity Trust and State Street Bank and Trust Company (dated 4/4/2007)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Equity Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Equity Trust, Evergreen Investment Management Company, LLC, and Evergreen Investment Services, Inc. (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Equity Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Distribution Plan for Class R Shares (dated 12/31/2008)
Distribution Plan for Class IS Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN SELECT EQUITY TRUST
With respect to Evergreen Strategic Growth Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Select Equity Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Select Equity Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Select Equity Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended 7/6/2000, 6/29/2001, 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 1/1/2007)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Select Equity Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Investment Management Company LLC, Evergreen Investment Services, Inc., and Evergreen Select Equity Trust (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Select Equity Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
1 | Historical performance shown for Class 2 prior to its inception is based on the performance of Class 1, the original class offered. The historical returns for Class 2 have not been adjusted to reflect the effect of the class' 12b-1 fee. The fund incurs a 12b-1 fee of 0.25% for Class 2. Class 1 does not pay a 12b-1 fee. If the fee had been reflected, 10 year returns for Class 2 would have been lower. |
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Distribution Plan for Class R Shares (dated 12/31/2008)
Distribution Plan for Class IS Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN FIXED INCOME TRUST
With respect to Evergreen Core Plus Bond Fund, Evergreen Diversified Income Builder Fund, Evergreen High Income Fund and Evergreen U.S. Government Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Fixed Income Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Letter Amendment to the Investment Advisory and Management Agreement between Evergreen Fixed Income Trust and Evergreen Investment Management Company, LLC (dated 9/19/2008, with respect to Evergreen High Income Fund)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Fixed Income Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (as of 9/18/1997)
Custodian Agreement
Custodian Agreement between Evergreen Fixed Income Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended 7/6/2000, 6/29/2001, 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 1/1/2007)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Fixed Income Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Fixed Income Trust, Evergreen Investment Management Company, LLC, and Evergreen Investment Services, Inc. (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Fixed Income Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN SELECT FIXED INCOME TRUST
With respect to Evergreen Adjustable Rate Fund, Evergreen Intermediate Municipal Bond Fund, and Evergreen International Bond Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Select Fixed Income Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Select Fixed Income Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Select Fixed Income Trust and State Street Bank and Trust Company (dated 11/18/1997, as amended 7/6/2000, 6/29/2001, 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 1/1/2007)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Select Fixed Income Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Select Fixed Income Trust, Evergreen Investment Management Company, LLC, and Evergreen Investment Services, Inc. (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Select Fixed Income Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Institutional Service Class Shares (dated 12/31/2008)
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Distribution Plan for Class R Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN MUNICIPAL TRUST
With respect to Evergreen California Municipal Bond Fund, Evergreen High Income Municipal Bond Fund, Evergreen Municipal Bond Fund, Evergreen North Carolina Municipal Bond Fund, Evergreen Pennsylvania Municipal Bond Fund, Evergreen Short-Intermediate Municipal Bond Fund and Evergreen Strategic Municipal Bond Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Municipal Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Municipal Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Municipal Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended 7/6/2000, 6/29/2001, 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 12/7/2006)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Municipal Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Municipal Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN VARIABLE ANNUITY TRUST
With respect to Evergreen VA Core Bond Fund, Evergreen VA Fundamental Large Cap Fund, Evergreen VA Growth Fund, Evergreen VA International Equity Fund, Evergreen VA Omega Fund and Evergreen VA Special Values Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Variable Annuity Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Variable Annuity Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Variable Annuity Trust and State Street Bank and Trust Company (dated 5/1/1998, as amended 8/10/1998 (with respect to Evergreen VA International Equity Fund), 2/1/2000 (with respect to Evergreen VA Growth Fund), 7/6/2000, 6/29/2001, 8/1/2002 (with respect to Evergreen VA Core Bond Fund), 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 12/15/2006)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Variable Annuity Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Variable Annuity Trust, Evergreen Investment Management Company, LLC, and Evergreen Investment Services, Inc. (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Variable Annuity Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plan
Distribution Plan for Class 2 Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN MONEY MARKET TRUST
With respect to Evergreen California Municipal Money Market Fund, Evergreen Money Market Fund, Evergreen Municipal Money Market Fund, Evergreen New Jersey Municipal Money Market Fund, Evergreen New York Municipal Money Market Fund, Evergreen Pennsylvania Municipal Money Market Fund, Evergreen Treasury Money Market Fund and Evergreen U.S. Government Money Market Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Money Market Trust and Evergreen Investment Management Company, LLC (dated 3/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Money Market Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Money Market Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended in 1998 (as filed with the Securities and Exchange Commission 5/31/2007, with respect to Evergreen New Jersey Municipal Money Market Fund), 7/27/1999 (with respect to Evergreen California Municipal Money Market Fund and Evergreen U.S. Government Money Market Fund), 7/6/2000, 6/19/2001, 7/1/2001 (with respect to Evergreen New York Municipal Money Market Fund), 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 1/1/2007)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Investment Services, Inc. and Evergreen Money Market Trust (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Money Market Trust, Evergreen Investment Management Company, LLC, and Evergreen Investment Services, Inc. (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Money Market Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Distribution Plan for Class S Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN SELECT MONEY MARKET TRUST
With respect to Evergreen Institutional 100% Treasury Money Market Fund, Evergreen Institutional Money Market Fund, Evergreen Institutional Municipal Money Market Fund, Evergreen Institutional Treasury Money Market Fund, Evergreen Institutional U.S. Government Money Market Fund and Evergreen Prime Cash Management Money Market Fund
Advisory Agreement
Investment Advisory and Management Agreement between Evergreen Select Money Market Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen Select Money Market Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (restated as of 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen Select Money Market Trust and State Street Bank and Trust Company (dated 9/18/1997, as amended 7/27/1999 (with respect to Evergreen Institutional U.S. Government Money Market Fund), 7/6/2000, 6/29/2001, 2/15/2002 (with respect to Evergreen Prime Cash Management Money Market Fund), 1/19/2006, and 12/7/2006)
Amended Pricing Schedule to Custodian Agreement (dated 12/15/2006)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen Investment Services, Inc. and Evergreen Select Money Market Trust (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Investment Management Company, LLC, Evergreen Investment Services, Inc. and Evergreen Select Money Market Trust (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen Select Money Market Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Distribution Plans
Distribution Plan for Administrative Class Shares (dated 12/31/2008)
Distribution Plan for Investor Class Shares (dated 12/31/2008)
Distribution Plan for Institutional Service Class Shares (dated 12/31/2008)
Distribution Plan for Participant Class Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
EVERGREEN INTERNATIONAL TRUST
With respect to Evergreen Emerging Markets Growth Fund, Evergreen Global Large Cap Equity Fund, Evergreen Global Opportunities Fund, Evergreen International Equity Fund, Evergreen Intrinsic World Equity Fund and Evergreen Precious Metals Fund
Advisory Agreements
Investment Advisory and Management Agreement between Evergreen International Trust and Evergreen Investment Management Company, LLC (dated 2/12/2009, with respect to Evergreen Emerging Markets Growth Fund, Evergreen Global Large Cap Equity Fund, Evergreen Global Opportunities Fund, Evergreen International Equity Fund and Evergreen Precious Metals Fund)
Investment Advisory and Management Agreement between Evergreen International Trust and Evergreen Investment Management Company, LLC (dated 3/12/2009, with respect to the Evergreen Intrinsic World Equity Fund)
Underwriting Agreement
Principal Underwriting Agreement between Evergreen International Trust and Wells Fargo Funds Distributor, LLC (dated 1/4/2010)
Deferred Compensation Plan
Deferred Compensation Plan (dated 1/1/2005)
Custodian Agreement
Custodian Agreement between Evergreen International Trust and State Street Bank and Trust Company (dated 6/29/2001, as amended 1/19/2006, 12/7/2006, and 12/7/2006 (with respect to Evergreen Intrinsic World Equity Fund)
Amended Pricing Schedule to Custodian Agreement (dated 12/15/2006)
Administrative Services Agreement
Master Administrative Services Agreement between Evergreen International Trust and Evergreen Investment Services, Inc. (dated 1/2/2002)
Transfer and Assumption of Master Administrative Services Agreement between Evergreen Investment Management Company, LLC, Evergreen Investment Services Inc., and Evergreen International Trust (dated 1/1/2008)
Amended and Restated Master Transfer and Recordkeeping Agreement between Evergreen International Trust and Evergreen Service Company, LLC (dated 9/21/2006)
Letter Amendment to Master Transfer and Recordkeeping Agreement between Evergreen International Trust and Evergreen Service Company, LLC (dated 12/7/2006, with respect to Evergreen Intrinsic World Equity Fund)
Distribution Plans
Distribution Plan for Class A Shares (dated 12/31/2008)
Distribution Plan for Class B Shares (dated 12/31/2008)
Distribution Plan for Class C Shares (dated 12/31/2008)
Distribution Plan for Class R Shares (dated 12/31/2008)
Multiple Class Plan
Multiple Class Plan (dated 10/7/2003)
Exhibit B
Comparison of the Funds' Fundamental Investment Policies
Diversification | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not make any investment that is inconsistent with the Fund's classification as a diversified investment company under the 1940 Act. | The Funds may not purchase the securities of an issuer if, as a result, with respect to 75% of the Fund's total assets, more than 5% of the value of its total assets would be invested in the securities of any one issuer or, with respect to 100% of its assets, the Fund's ownership would be more than 10% of the outstanding voting securities of such issuer. This policy does not restrict a Fund's ability to invest in securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities. |
Concentration | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not concentrate its investments in the securities of issuers primarily engaged in any particular industry (other than securities that are issued or guaranteed by the U.S. government or its agencies or instrumentalities). | The Funds may not purchase the securities of issuers conducting their principal business activity in the same industry if, immediately after the purchase and as a result thereof, the value of a Fund's investments in that industry would equal 25% of the current value of the Fund's total assets, provided that there is no limitation with respect to investment in (i) securities issued or guaranteed by the United States Government, its agencies or instrumentalities, and (ii) in municipal securities. |
Issuing Senior Securities | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
Except as permitted under the 1940 Act, the Fund may not issue senior securities. | The Fund may not issue senior securities, except to the extent permitted under the 1940 Act, including the rules, regulations and any exemptive orders obtained thereunder. |
Borrowing | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Growth Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not borrow money, except to the extent permitted by applicable law. | The Fund may not borrow money, except to the extent permitted under the 1940 Act, including the rules, regulations and any orders obtained thereunder. |
Underwriting | |
Evergreen Fund | Wellls Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not underwrite securities of other issuers, except insofar as the Fund may be deemed to be an underwriter in connection with the disposition of its portfolio securities. | The Fund may not underwrite securities of other issuers, except to the extent that the purchase of permitted investments directly from the issuer thereof or from an underwriter for an issuer and the later disposition of such securities in accordance with a Fund's investment program may be deemed to be an underwriting. |
Real Estate | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not purchase or sell real estate, except that, to the extent permitted by applicable law, the Fund may invest in (a) securities that are directly or indirectly secured by real estate, or (b) securities issued by issuers that invest in real estate. | The Funds may not purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Funds from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); |
Commodities | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not purchase or sell commodities or contracts on commodities, except to the extent that the Fund may engage in financial futures contracts and related options and currency contracts and related options and may otherwise do so in accordance with applicable law and without registering as a commodity pool operator under the Commodity Exchange Act. | The Fund may not purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Funds from purchasing or selling options and futures contracts, or from investing in securities or other instruments backed by physical commodities). |
Lending | |
Evergreen Fund | Wells Fargo Advantage Fund |
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund |
Evergreen VA Omega Fund | Wells Fargo Advantage VT Omega Growth Fund |
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund |
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund |
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund |
Evergreen VA Fundamental Large Cap Fund | Wells Fargo Advantage VT Core Equity Fund |
Wells Fargo Advantage VT Equity Income Fund | |
The Fund may not make loans to other persons, except that the Fund may lend its portfolio securities or cash in accordance with applicable law. The acquisition of investment securities or other investment instruments shall not be deemed to be the making of a loan. | The Fund may not make loans to other parties if, as a result, the aggregate value of such loans would exceed one-third of a Fund's total assets. For the purposes of this limitation, entering into repurchase agreements, lending securities and acquiring any debt securities are not deemed to be the making of loans. |
Exhibit C
Additional Target and Acquiring Fund Expense Information
The Annual Fund Operating Expenses tables and the examples that follow are based upon the actual expenses incurred by the Target and Acquiring Funds during their most recently completed fiscal year. The pro forma Annual Fund Operating Expenses table for the Acquiring Fund shows you what the annual operating expenses would have been for the Acquiring Fund for the period covered by the Fund's most recent financial statements, assuming the Merger had taken place at the beginning of the period. See the section entitled "Financial Statements" in this prospectus/proxy statement for the date of the most recent financial statements.
This section compares the fees and expenses you pay if you buy, hold, and sell shares of the Target Fund and the Acquiring Fund. The pro forma expense information presented with respect to each Acquiring Fund assumes that shareholders of each corresponding Target Fund approve their respective Merger with the Acquiring Fund and that each Merger is consummated. With respect to the Wells Fargo Advantage VT Omega Growth Fund, Wells Fargo Advantage VT Intrinsic Value Fund, and Wells Fargo Advantage VT Core Equity Fund, if one, but not both, of those Mergers are consummated, the pro forma expense information shown for such Acquiring Fund would have been less than [0.01%] for each class. The tables and examples that follow do not reflect any contract, policy, separate account, or other charges assessed by participating insurance companies. Please refer to the prospectus for the variable annuity contract or variable life insurance policy for information regarding such charges.
EVERGREEN VA CORE BOND FUND INTO WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Core Bond Fund | |||||||||||||||
Management Fees | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses1 | Total Annual Fund Operating Expenses1 | |||||||||||
Class 2 | 0.32% 0.32% | 0.25% 0.25% | 0.36% 0.36% | 0.07% 0.07% | 1.00% 1.00% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses incurred indirectly by the Fund as a result of its investment in other investment companies. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA Core Bond Fund | ||||
After: | Class 2 Class 2 | |||
1 Year | $102 $102 | |||
3 Years | $318 $318 | |||
5 Years | $552 $552 | |||
10 Years | $1,225 $1,225 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Total Return Bond Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Single Class | 0.42% 0.42% | 0.25% | 0.53% | 0.01% | 1.21% | (0.30%) | 0.91% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
5 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
6 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.90%. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Total Return Bond Fund | ||||
After: | ||||
1 Year | $93 $93 | |||
3 Years | $354 $354 | |||
5 Years | $636 $636 | |||
10 Years | $1,439 $1,439 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Total Return Bond Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Class 2 | 0.40% 0.40% | 0.25% | 0.37% | 0.02% | 1.04% | (0.12%) | 0.92% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
5 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.90% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the table above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Total Return Bond Fund | ||||
After: | Class 2 Class 2 | |||
1 Year | $94 $94 | |||
3 Years | $293 $293 | |||
5 Years | $537 $537 | |||
10 Years | $1,237 $1,237 |
EVERGREEN VA OMEGA FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND INTO WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Omega Fund | ||||||||||||
Management Fees | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses1 | Total Annual Fund Operating Expenses1 | |||||||||
Class 1 | 0.52% 0.52% | 0.00% 0.00% | 0.25% 0.25% | 0.77% 0.77% | ||||||||
Class 2 | 0.52% 0.52% | 0.25% 0.25% | 0.25% 0.25% | 1.02% 1.02% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA Omega Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $79 $79 | $104 $104 | ||||
3 Years | $246 $246 | $325 $325 | ||||
5 Years | $428 $428 | $563 $563 | ||||
10 Years | $954 $954 | $1,248 $1,248 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Large Company Growth Fund | ||||||||||||||
Management Fees1 | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver)3 | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)4 | |||||||||
Single Class | 0.55% 0.55% | 0.25% | 0.40% 0.40% | 1.20% 1.20% | (0.20%) (0.20%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
4 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Large Company Growth Fund | |||||||||||||||||||||||||||||||||||||||||||
After: | |||||||||||||||||||||||||||||||||||||||||||
1 Year | $102 $102 | ||||||||||||||||||||||||||||||||||||||||||
3 Years | $361 $361 | ||||||||||||||||||||||||||||||||||||||||||
5 Years | $640 $640 | ||||||||||||||||||||||||||||||||||||||||||
10 Years | $1,437 $1,437 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Omega Growth Fund | ||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)3 | |||||||||
Class 1 | 0.55% 0.55% | 0.00% | 0.24% 0.24% | 0.79% 0.79% | (0.04%) (0.04%) | 0.75% 0.75% | ||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.24% 0.24% | 1.04% 1.04% | (0.04%) (0.04%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Omega Growth Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $77 $77 | $102 $102 | ||||
3 Years | $240 $240 | $318 $318 | ||||
5 Years | $426 $426 | $562 $562 | ||||
10 Years | $989 $989 | $1,260 $1,260 |
Wells Fargo Advantage VT Omega Growth Fund | |||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | ||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.32% | 1.12% | (0.12%) | 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
After: | Class 2 |
1 Year | $104 |
3 Years | $325 |
5 Years | $563 |
10 Years | $1,248 |
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND INTO WELLS FARGO ADVANTAGE VT CORE EQUITY FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Fundamental Large Cap Fund | ||||||||||||
Management Fees | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses | Total Annual Fund Operating Expenses | |||||||||
Class 1 | 0.63% 0.63% | 0.00% 0.00% | 0.22% 0.22% | 0.85% 0.85% | ||||||||
Class 2 | 0.63% 0.63% | 0.25% 0.25% | 0.22% 0.22% | 1.10% 1.10% |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the table above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA Fundamental Large Cap Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $87 $87 | $112 $112 | ||||
3 Years | $271 $271 | $350 $350 | ||||
5 Years | $471 $471 | $606 $606 | ||||
10 Years | $1,049 $1,049 | $1,340 $1,340 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Large Company Core Fund | ||||||||||||||
Management Fees1 | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver)3 | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)4 | |||||||||
Single Class | 0.55% 0.55% | 0.25% | 1.09% 1.09% | 1.89% 1.89% | (0.89%) (0.89%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
4 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Large Company Core Fund | |||||||||||||||||||||||||||||||||||||||||||
After: | |||||||||||||||||||||||||||||||||||||||||||
1 Year | $102 $102 | ||||||||||||||||||||||||||||||||||||||||||
3 Years | $507 $507 | ||||||||||||||||||||||||||||||||||||||||||
5 Years | $938 $938 | ||||||||||||||||||||||||||||||||||||||||||
10 Years | $2,139 $2,139 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Core Equity Fund | ||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)3 | |||||||||
Class 1 | 0.55% 0.55% | 0.00% | 0.22% 0.22% | 0.77% 0.77% | (0.02%) (0.02%) | 0.75% 0.75% | ||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.22% 0.22% | 1.02% 1.02% | (0.02%) (0.02%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Core Equity Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $77 $77 | $102 $102 | ||||
3 Years | $240 $240 | $318 $318 | ||||
5 Years | $422 $422 | $557 $557 | ||||
10 Years | $977 $977 | $1,242 $1,242 |
Wells Fargo Advantage VT Core Equity Fund | |||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | ||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.86% | 1.66% | (0.66%) | 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
After: | Class 2 |
1 Year | $112 |
3 Years | $350 |
5 Years | $606 |
10 Years | $1,340 |
EVERGREEN VA SPECIAL VALUES FUND INTO WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Special Values Fund | ||||||||||||
Management Fees | Distribution (12b-1) Fees | Other Expenses1 | Total Annual Fund Operating Expenses1,2 | |||||||||
Class 1 | 0.80% 0.80% | 0.00% 0.00% | 0.25% 0.25% | 1.05% 1.05% | ||||||||
Class 2 | 0.80% 0.80% | 0.25% 0.25% | 0.25% 0.25% | 1.30% 1.30% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
2 | The Total Annual Fund Operating Expenses listed above do not reflect voluntary fee waivers and/or expense reimbursements made by the Fund's investment advisor in order to reduce expense ratios. Including voluntary fee waivers and/or expense reimbursements as of the most recently completed fiscal year, Total Annual Fund Operating Expenses were 1.01% for Class 1 and 1.26% for Class 2. The Fund's investment advisor may cease these voluntary waivers and/or reimbursements at any time. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA Special Values Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $107 $107 | $132 $132 | ||||
3 Years | $334 $334 | $412 $412 | ||||
5 Years | $579 $579 | $713 $713 | ||||
10 Years | $1,283 $1,283 | $1,568 $1,568 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Small/Mid Cap Value Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Single Class | 0.75% 0.75% | 0.25% | 1.56% | 0.01% | 2.57% | (1.42%) | 1.15% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
5 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Small/Mid Cap Value Fund | ||||
After: | ||||
1 Year | $117 $117 | |||
3 Years | $664 $664 | |||
5 Years | $1,238 $1,238 | |||
10 Years | $2,799 $2,799 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Small Mid Cap Value | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Class 1 | 0.75% 0.75% | 0.00% | 0.27% | 0.01% | 1.03% | (0.13%) | 0.90% | ||||||||
Class 2 | 0.75% 0.75% | 0.25% | 0.27% | 0.01% | 1.28% | (0.13%) | 1.15% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
5 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.89% for Class 1 and 1.14% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Small/Mid Cap Value Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $92 $92 | $117 $117 | ||||
3 Years | $287 $287 | $365 $365 | ||||
5 Years | $529 $529 | $663 $663 | ||||
10 Years | $1,177 $1,177 | $1,509 $1,509 |
EVERGREEN VA GROWTH FUND INTO WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA Growth Fund | ||||||||||||
Management Fees | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses1 | Total Annual Fund Operating Expenses1,2 | |||||||||
Class 1 | 0.70% 0.70% | 0.00% 0.00% | 0.33% 0.33% | 1.03% 1.03% | ||||||||
Class 2 | 0.70% 0.70% | 0.25% 0.25% | 0.33% 0.33% | 1.28% 1.28% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
2 | The Total Annual Fund Operating Expenses listed above do not reflect voluntary fee waivers and/or expense reimbursements made by the Fund's investment advisor in order to reduce expense ratios. Including voluntary fee waivers and/or expense reimbursements as of the most recently completed fiscal year, Total Annual Fund Operating Expenses were 1.01% for Class 1 and 1.26% for Class 2. The Fund's investment advisor may cease these voluntary waivers and/or reimbursements at any time. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA Growth Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $105 $105 | $130 $130 | ||||
3 Years | $328 $328 | $406 $406 | ||||
5 Years | $569 $569 | $702 $702 | ||||
10 Years | $1,259 $1,259 | $1,545 $1,545 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Small Cap Growth Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Single Class | 0.75% 0.75% | 0.25% | 0.26% | 0.01% | 1.27% | (0.06%) | 1.21% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
5 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
6 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 1.20%. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Small Cap Growth Fund | ||||
After: | ||||
1 Year | $123 $123 | |||
3 Years | $397 $397 | |||
5 Years | $691 $691 | |||
10 Years | $1,529 $1,529 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Small Cap Growth Fund | ||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses2 | Acquired Fund Fees and Expenses3 | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)4,5 | ||||||||
Class 1 | 0.75% 0.75% | 0.00% | 0.20% 0.20% | 0.01% 0.01% | 0.96% | 0.00% 0.00% | 0.96% 0.96% | |||||||
Class 2 | 0.75% 0.75% | 0.25% | 0.20% 0.20% | 0.01% 0.01% | 1.21% | 0.00% 0.00% | 1.21% 1.21% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
5 | Funds Management has committed for three years after the closing of the merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.96% for Class 1 and 1.21% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Small Cap Growth Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $98 $98 | $123 $123 | ||||
3 Years | $306 $306 | $384 $384 | ||||
5 Years | $531 $531 | $665 $665 | ||||
10 Years | $1,153 $1,153 | $1,466 $1,466 |
EVERGREEN VA INTERNATIONAL EQUITY FUND INTO WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Evergreen VA International Equity Fund | ||||||||||||
Management Fees | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses1 | Total Annual Fund Operating Expenses1 | |||||||||
Class 1 | 0.43% 0.43% | 0.00% 0.00% | 0.22% 0.22% | 0.65% 0.65% | ||||||||
Class 2 | 0.43% 0.43% | 0.25% 0.25% | 0.22% 0.22% | 0.90% 0.90% |
1 | The Total Annual Fund Operating Expenses in the table above include fees and expenses of 0.01% or less that were incurred indirectly by the Fund as a result of its investment in other investment companies. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Evergreen VA International Equity Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $66 $66 | $92 $92 | ||||
3 Years | $208 $208 | $287 $287 | ||||
5 Years | $362 $362 | $498 $498 | ||||
10 Years | $810 $810 | $1,108 $1,108 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT International Core Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Single Class | 0.75% 0.75% | 0.25% | 1.04% | 0.01% | 2.05% | (1.04%) | 1.01% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
5 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
6 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 1.00%. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT International Core Fund | |||||||||||||||||||||||||||||||||||||||||||
After: | |||||||||||||||||||||||||||||||||||||||||||
1 Year | $103 $103 | ||||||||||||||||||||||||||||||||||||||||||
3 Years | $542 $542 | ||||||||||||||||||||||||||||||||||||||||||
5 Years | $1,007 $1,007 | ||||||||||||||||||||||||||||||||||||||||||
10 Years | $2,296 $2,296 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT International Equity Fund | |||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Acquired Fund Fees and Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | |||||||||
Class 1 | 0.75% 0.75% | 0.00% | 0.20% | 0.01% | 0.96% | (0.26%) | 0.70% | ||||||||
Class 2 | 0.75% 0.75% | 0.25% | 0.20% | 0.01% | 1.21% | (0.26%) | 0.95% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Reflects the pro rata portion of the net operating expenses of any money market fund or other fund held by the Fund. Shareholders indirectly bear these underlying expenses because the NAV and/or distributions paid reflect such underlying expenses. |
4 | The Total Annual Fund Operating Expenses (After Waiver) shown here include the expenses of any money market fund or other fund held by the Fund. |
5 | Funds Management has committed for three years after the closing of the merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed 0.69% for Class 1 and 0.94% for Class 2. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT International Core Fund | ||||||
After: | Class 1 Class 1 | Class 2 Class 2 | ||||
1 Year | $72 $72 | $97 $97 | ||||
3 Years | $224 $224 | $303 $303 | ||||
5 Years | $451 $451 | $586 $586 | ||||
10 Years | $1,103 $1,103 | $1,393 $1,393 |
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND AND WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND INTO WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT Equity Income Fund | ||||||||||||||
Management Fees1 | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver)3 | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)4 | |||||||||
Single Class | 0.55% 0.55% | 0.25% | 0.38% 0.38% | 1.18% 1.18% | (0.18%) (0.18%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
4 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the table above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT Equity Income Fund | |||||||||||||||||||||||||||||||||||||||||||
After: | |||||||||||||||||||||||||||||||||||||||||||
1 Year | $102 $102 | ||||||||||||||||||||||||||||||||||||||||||
3 Years | $357 $357 | ||||||||||||||||||||||||||||||||||||||||||
5 Years | $632 $632 | ||||||||||||||||||||||||||||||||||||||||||
10 Years | $1,416 $1,416 |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Wells Fargo Advantage VT C&B Large Cap Value Fund | ||||||||||||||
Management Fees1 | Distribution and/or Service (Rule 12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver)3 | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)4 | |||||||||
Single Class | 0.55% 0.55% | 0.25% | 0.83% 0.83% | 1.63% 1.63% | (0.63%) (0.63%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Expenses have been adjusted as necessary from amounts incurred during the Fund's most recent fiscal year to reflect current fees and expenses. |
4 | Funds Management has committed through 4/30/2011, to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver) excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this date, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the table above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Wells Fargo Advantage VT C&B Large Cap Value Fund | |||||||||||||||||||||||||||||||||||||||||||
After: | |||||||||||||||||||||||||||||||||||||||||||
1 Year | $102 $102 | ||||||||||||||||||||||||||||||||||||||||||
3 Years | $453 $453 | ||||||||||||||||||||||||||||||||||||||||||
5 Years | $827 $827 | ||||||||||||||||||||||||||||||||||||||||||
10 Years | $1,880 $1,880 |
Pro Forma Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) and Pro Forma Example
Wells Fargo Advantage VT Intrinsic Value Fund | ||||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses2 | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver)3 | |||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.31% 0.31% | 1.11% 1.11% | (0.11%) (0.11%) | 1.00% 1.00% |
1 | The Fund has a breakpoint schedule under which the management fee will decrease on Fund net assets above designated levels, as shown in the "Management of the Funds - Advisory Fees" section. |
2 | Includes expenses payable to affiliates of Wells Fargo & Company. |
3 | Funds Management has committed for three years after the closing of the Merger to waive fees and/or reimburse expenses to the extent necessary to ensure that the Fund's Total Annual Fund Operating Expenses (After Waiver), excluding brokerage commissions, interest, taxes, extraordinary expenses, and the expenses of any money market fund or other fund held by the Fund, do not exceed the Total Annual Fund Operating Expenses (After Waiver) shown. After this time, the Total Annual Fund Operating Expenses (After Waiver) may be increased only with the approval of the Board of Trustees. |
Wells Fargo Advantage VT Intrinsic Value Fund | ||||
After: | Class 2 Class 2 | |||
1 Year | $102 $102 | |||
3 Years | $318 $318 | |||
5 Years | $578 $578 | |||
10 Years | $1,320 $1,320 |
Wells Fargo Advantage VT Intrinsic Value Fund | |||||||||||||
Management Fees1 | Distribution (12b-1) Fees | Other Expenses | Total Annual Fund Operating Expenses (Before Waiver) | Waiver of Fund Expenses | Total Annual Fund Operating Expenses (After Waiver) | ||||||||
Class 2 | 0.55% 0.55% | 0.25% | 0.62% | 1.42% | (0.42%) | 1.00% |
Exhibit D
Pro Forma Capitalization
Expense Example. The example below is intended to help you compare the costs of investing in the Fund with the costs of investing in other mutual funds. The example assumes a $10,000 initial investment, 5% annual total return, and that operating expenses remain the same as in the tables above. It shows costs if you sold all of your shares at the end of the period or continued to hold them. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
EVERGREEN VA CORE BOND FUND INTO WELLS FARGO ADVANTAGE VT TOTAL RETURN BOND FUND
Wells Fargo Advantage VT Intrinsic Value Fund | ||||
After: | Class 2 Class 2 | |||
1 Year | $102 $102 | |||
3 Years | $318 $318 | |||
5 Years | $649 $649 | |||
10 Years | $1,586 $1,586 |
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of December 31, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The Wells Fargo Advantage Total Return Bond Fund will rename its existing single class as Class 2 shares upon completion of the Merger. The pro forma data reflects an exchange ratio of approximately 0.80 and 0.81 for each Class 1 and Class 2 share, respectively, of the Acquiring Fund issued for each Class 1 and Class 2 share, respectively, of the Target Fund. The exchange ratios used in the Merger will likely be different from those shown here.The Wells Fargo Advantage VT Total Return Bond Fund will be the accounting survivor following the Merger.
Evergreen VA Core Bond Fund | Wells Fargo Advantage VT Total Return Bond Fund | Adjustments | Wells Fargo Advantage VT Total Return Bond Fund Pro Forma | |
Total Net Assets | ||||
Class 11 | $86,385 | N/A | N/A | $86,385 |
Class 2 | $30,249,654 | N/A | $95,134,402 | $125,384,056 |
Single Class | N/A | $95,134,402 | ($95,134,402) | N/A |
Total | $30,336,039 | $95,134,402 | $0 | $125,470,441 |
Net Asset Value per Share | ||||
Class 11 | $8.32 | N/A | N/A | $10.34 |
Class 2 | $8.35 | N/A | N/A | $10.34 |
Single Class | N/A | $10.34 | N/A | N/A |
Total Shares Outstanding | ||||
Class 11 | 10,383 | N/A | (2,032) | 8,351 |
Class 2 | 3,622,008 | N/A | 8,499,748 | 12,121,756 |
Single Class | N/A | 9,197,313 | (9,197,313) | N/A |
Total | 3,632,391 | 9,197,313 | (699,597) | 12,130,107 |
1 | This Class will liquidate effective ______, 2010. |
EVERGREEN VA OMEGA FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY GROWTH FUND INTO WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of December 31, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 0.44 for each Class 2 share of the Wells Fargo Advantage VT Omega Growth Fund issued for each Single Class share of Wells Fargo Advantage VT Large Company Growth Fund. The pro forma data reflects an exchange ratio of approximately 1.00 for each Class 1 and Class 2 share of the Wells Fargo Advantage VT Omega Growth Fund issued for each Class 1 and Class 2 share, respectively, of Evergreen VA Omega Fund. The exchange ratios used in the Merger will likely be different from those shown here. The Evergreen VA Omega Fund will be the accounting survivor following the Merger.
Wells Fargo Advantage VT Large Company Growth Fund | Evergreen VA Omega Fund | Adjustments | Wells Fargo Advantage VT Omega Growth Fund Pro Forma | |
Total Net Assets | ||||
Class 1 | N/A | $59,807,276 | N/A | $59,807,276 |
Class 2 | N/A | $33,196,394 | $69,506,206 | $102,702,600 |
Single Class | $69,506,206 | N/A | ($69,506,206) | N/A |
Total | $69,506,206 | $93,003,670 | $0 | $162,509,876 |
Net Asset Value per Share | ||||
Class 1 | N/A | $20.42 | N/A | $20.42 |
Class 2 | N/A | $20.19 | N/A | $20.19 |
Single Class | $8.97 | N/A | N/A | N/A |
Total Shares Outstanding | ||||
Class 1 | N/A | 2,929,251 | N/A | 2,929,251 |
Class 2 | N/A | 1,644,072 | 3,442,346 | 5,086,418 |
Single Class | 7,749,030 | N/A | (7,749,030) | N/A |
Total | 7,749,030 | 4,573,323 | (4,306,684) | 8,015,669 |
EVERGREEN VA FUNDAMENTAL LARGE CAP FUND AND WELLS FARGO ADVANTAGE VT LARGE COMPANY CORE FUND INTO WELLS FARGO ADVANTAGE VT CORE EQUITY FUND
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of November 30, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 0.73 for each Class 2 share of the Wells Fargo Advantage VT Core Equity Fund issued for each Single Class share of Wells Fargo Advantage VT Large Company Core Fund. The pro forma data reflects an exchange ratio of approximately 1.00 for each Class 1 and Class 2 share, respectively, of the Wells Fargo Advantage VT Core Equity Fund issued for each Class 1 and Class 2 share, respectively, of Evergreen VA Fundamental Large Cap Fund. The exchange ratios used in the Merger will likely be different from those shown here. The Evergreen VA Fundamental Large Cap Fund will be the accounting survivor following the Merger.
Wells Fargo Advantage VT Large Company Core Fund | Evergreen VA Fundamental Large Cap Fund | Adjustments | Wells Fargo Advantage VT Core Equity Fund Pro Forma | |
Total Net Assets | ||||
Class 1 | N/A | $54,504,490 | N/A | $54,504,490 |
Class 2 | N/A | $69,597,676 | $10,558,233 | $80,155,909 |
Single Class | $10,558,233 | N/A | ($10,558,233) | N/A |
Total | $10,558,233 | $124,102,166 | $0 | $134,660,399 |
Net Asset Value per Share | ||||
Class 1 | N/A | $17.03 | N/A | $17.03 |
Class 2 | N/A | $16.94 | N/A | $16.94 |
Single Class | $12.40 | N/A | N/A | N/A |
Total Shares Outstanding | ||||
Class 1 | N/A | 3,199,833 | N/A | 3,199,833 |
Class 2 | N/A | 4,108,469 | 623,274 | 4,731,743 |
Single Class | 851,542 | N/A | (851,542) | N/A |
Total | 851,542 | 7,308,302 | (228,268) | 7,931,576 |
EVERGREEN VA SPECIAL VALUES FUND INTO WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of December 31, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 1.51 and 1.50 for each Class 1 and Class 2 share, respectively, of the Wells Fargo Advantage VT Small/Mid Cap Value Fund issued for each Class 1 and Class 2 share, respectively, of Evergreen VA Special Values Fund. The exchange ratios used in the Merger will likely be different from those shown here. The Wells Fargo Advantage VT Small/Mid Cap Value Fund, which is adding Class 1 shares and renaming its existing Single Class as Class 2 shares upon completion of the Merger, will be the accounting survivor following the Merger.
Evergreen VA Special Values Fund | Wells Fargo Advantage VT Small/Mid Cap Value Fund | Adjustments | Wells Fargo Advantage VT Small/Mid Cap Value Fund Proforma | |
Total Net Assets | ||||
Class 1 | $59,223,793 | N/A | N/A | $59,223,793 |
Class 2 | $11,203,977 | N/A | $12,017,645 | $23,221,622 |
Single Class | N/A | $12,017,645 | ($12,017,645) | N/A |
Total | $70,427,770 | $12,017,645 | $0 | $82,445,415 |
Net Asset Value per Share | ||||
Class 1 | $11.81 | N/A | N/A | $7.83 |
Class 2 | $11.78 | N/A | N/A | $7.83 |
Single Class | N/A | $7.83 | N/A | N/A |
Total Shares Outstanding | ||||
Class 1 | 5,106,617 | N/A | 2,543,980 | 7,560,597 |
Class 2 | 951,246 | N/A | 2,103,270 | 2,964,516 |
Single Class | N/A | 1,534,198 | (1,534,198) | N/A |
Total | 5,967,863 | 1,534,198 | 3,023,052 | 10,525,113 |
EVERGREEN VA GROWTH FUND INTO WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of December 31, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 1.82 and 1.78 for each Class 1 and Class 2 share, respectively, of the Wells Fargo Advantage VT Small Cap Growth Fund issued for each Class 1 and Class 2 share, respectively, of Evergreen VA Growth Fund. The exchange ratios used in the Merger will likely be different from those shown here. The Wells Fargo Advantage VT Small Cap Growth Fund, which is adding Class 1 shares and renaming its existing Single Class as Class 2 shares upon completion of the Merger, will be the accounting survivor following the Merger.
Evergreen VA Growth Fund | Wells Fargo Advantage VT Small Cap Growth Fund | Adjustments | Wells Fargo Advantage VT Small Cap Growth Fund Pro forma | |
Total Net Assets | ||||
Class 1 | $39,713,273 | N/A | N/A | $39,713,273 |
Class 2 | $9,072,270 | N/A | $185,344,972 | $194,417,242 |
Single Class | N/A | $185,344,972 | ($185,344,972) | $0 |
Total | $48,785,543 | $185,344,972 | $0 | $234,130,515 |
Net Asset Value per Share | ||||
Class 1 | $11.53 | N/A | N/A | $6.35 |
Class 2 | $11.28 | N/A | N/A | $6.35 |
Single Class | N/A | $6.35 | N/A | N/A |
Total Shares Outstanding | ||||
Class 1 | 3,445,603 | N/A | 2,810,928 | 6,256,531 |
Class 2 | 804,616 | N/A | 29,824,304 | 30,628,920 |
Single Class | N/A | 29,199,651 | (29,199,651) | N/A |
Total | 4,250,219 | 29,199,651 | 3,435,581 | 36,885,451 |
EVERGREEN VA INTERNATIONAL EQUITY FUND INTO WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
The following table sets forth the capitalizations of each of the Target and Acquiring Funds as of November 30, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 0.47 for each Class 2 share of the Wells Farge Advantage VT International Core Fund issued for each Single Class share of Evergreen VA International Equity Fund. The pro forma data reflects an exchange ratio of approximately 1.00 for each Class 1 and Class 2 share of the Wells Farge Advantage VT International Core Fund issued for each Class 1 and Class 2 share of Evergreen VA International Equity Fund. Wells Fargo Advantage VT International Core Equity Fund will add Class 1 shares and rename its existing Single Class as Class 2 shares upon completion of the Merger. The exchange ratios used in the Merger will likely be different from those shown here. The Evergreen VA International Equity Fund will be the accounting survivor following the Merger.
Evergreen VA International Equity Fund | Wells Fargo Advantage VT International Core Fund | Adjustments | Wells Fargo Advantage VT International Core Fund Pro forma | |
Total Net Assets | ||||
Class 1 | $68,446,408 | N/A | N/A | $68,446,408 |
Class 2 | $856,625,242 | N/A | $18,386,039 | $875,011,281 |
Single Class | N/A | $18,386,039 | ($18,386,039) | N/A |
Total | $925,071,650 | $18,386,039 | $0 | $943,457,689 |
Net Asset Value per Share | ||||
Class 1 | $10.40 | N/A | N/A | $10.40 |
Class 2 | $10.33 | N/A | N/A | $10.33 |
Single Class | N/A | $4.90 | N/A | N/A |
Total Shares Outstanding | ||||
Class 1 | 6,582,268 | N/A | N/A | 6,582,268 |
Class 2 | 82,928,413 | N/A | 1,779,933 | 84,708,346 |
Single Class | N/A | 3,750,672 | (3,750,672) | N/A |
Total | 89,510,681 | 3,750,672 | (1,970,739) | 91,290,614 |
WELLS FARGO ADVANTAGE VT EQUITY INCOME FUND AND WELLS FARGO ADVANTAGE VT C&B LARGE CAP VALUE FUND INTO WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND
The following table sets forth the capitalizations of Target and Acquiring Funds as of December 31, 2009, and the capitalization of the Acquiring Fund on a pro forma basis as of that date after giving effect to the proposed acquisition of assets at net asset value. The pro forma data reflects an exchange ratio of approximately 0.79 for each Class 2 share of the Wells Fargo Advantage VT Intrinsic Value Fund issued for each Single Class share of Wells Fargo Advantage VT C&B Large Cap Value Fund. The pro forma data reflects an exchange ratio of approximately 1.00 for each Class 2 share of the Wells Fargo Advantage VT Intrinsic Value Fund issued for each Single Class share of Wells Fargo Advantage VT Equity Income Fund. The exchange ratios used in the Merger will likely be different from those shown here. The Wells Fargo Advantage VT Equity Income Fund will be the accounting survivor following the Merger.
Wells Fargo Advantage VT C&B Large Cap Value Fund | Wells Fargo Advantage VT Equity Income Fund | Adjustments | Wells Fargo Advantage VT Intrinsic Value Fund Pro Forma | |
Total Net Assets | ||||
Class 2 | N/A | N/A | 69,166,795 | $69,166,795 |
Single Class | $14,725,711 | $54,441,084 | ($69,166,795) | N/A |
Total | $14,725,711 | $54,441,084 | $0 | $69,166,795 |
Net Asset Value per Share | ||||
Class 2 | N/A | N/A | N/A | $11.31 |
Single Class | $8.91 | $11.31 | N/A | N/A |
Total Shares Outstanding | ||||
Class 2 | N/A | N/A | 6,113,913 | 6,113,913 |
Single Class | 1,653,253 | 4,812,252 | (6,465,505) | N/A |
Total | 4,812,252 | 4,812,252 | (352,592) | 6,113,913 |
Exhibit E
Additional Acquiring Fund Information
ADDITIONAL ACQURING FUND INFORMATION WITH RESPECT TO WELLS FARGO ADVANTAGE VT OMEGA GROWTH FUND, WELLS FARGO ADVANTAGE VT CORE EQUITY FUND, WELLS FARGO ADVANTAGE VT INTRINSIC VALUE FUND AND FOR CLASS 1 SHARES OF WELLS FARGO ADVANTAGE VT SMALL/MID CAP VALUE FUND, WELLS FARGO ADVANTAGE VT SMALL CAP GROWTH FUND, AND WELLS FARGO ADVANTAGE VT INTERNATIONAL CORE FUND
Dormant Multi-Manager Disclosure
(applies only to Wells Fargo Advantage VT Omega Growth Fund, Wells Fargo Advantage VT Core Equity Fund, Wells Fargo Advantage VT Intrinsic Value Fund and Wells Fargo Advantage VT Small/Mid Cap Value Fund)
The Board has a adopted a "multi-manager" arrangement. Under this arrangement, each Fund and Funds Management may engage one or more sub-advisers to make day-to-day investment decisions for the Fund's assets. Funds Management would retain ultimate responsibility (subject to oversight of the Board) for overseeing the sub-advisers and may, at times, recommend to the Board that the Fund: (1) change, add or terminate one or more sub-advisers; (2) continue to retain a sub-adviser even though the sub-adviser's ownership or corporate structure has changed; or (3) materially change a sub-advisory agreement with a sub-adviser.
Applicable law generally requires a Fund to obtain shareholder approval for most of these types of recommendations, even if the Board approves the proposed action. Under the "multi-manager" arrangement approved by the Board, the Fund will seek exemptive relief, if necessary, from the SEC to permit Funds Management (subject to the Board's oversight and approval) to make decisions about the Fund's sub-advisory arrangements without obtaining shareholder approval. The Fund will continue to submit matters to shareholders for their approval to the extent required by applicable law. Meanwhile, this multi-manager arrangement will remain dormant and will not be implemented until shareholders are further notified.
Additional Payments to Dealers
In addition to dealer reallowances and payments made by each Fund for distribution and shareholder servicing, the Fund's adviser, the distributor or their affiliates make additional payments ("Additional Payments") to certain selling or shareholder servicing agents for the Fund, which include broker-dealers. These Additional Payments are made in connection with the sale and distribution of shares of the Fund or for services to the Fund and its shareholders. These Additional Payments, which may be significant, are paid by the Fund's adviser, the distributor or their affiliates, out of their revenues, which generally come directly or indirectly from fees paid by the entire Fund complex.
In return for these Additional Payments, the Fund's adviser and distributor expect to receive certain marketing or servicing advantages that are not generally available to mutual funds that do not make such payments. Such advantages are expected to include, without limitation, placement of the Fund on a list of mutual funds offered as investment options to the selling agent's clients (sometimes referred to as "Shelf Space"); access to the selling agent's registered representatives; and/or ability to assist in training and educating the selling agent's registered representatives.
Certain selling or shareholder servicing agents receive these Additional Payments to supplement amounts payable by the Fund under the shareholder servicing plans. In exchange, these agents provide services including, but not limited to, establishing and maintaining accounts and records; answering inquiries regarding purchases, exchanges and redemptions; processing and verifying purchase, redemption and exchange transactions; furnishing account statements and confirmations of transactions; processing and mailing monthly statements, prospectuses, shareholder reports and other SEC-required communications; and providing the types of services that might typically be provided by each Fund's transfer agent (e.g., the maintenance of omnibus or omnibus-like accounts, the use of the National Securities Clearing Corporation for the transmission of transaction information and the transmission of shareholder mailings).
The Additional Payments may create potential conflicts of interests between an investor and a selling agent who is recommending a particular mutual fund over other mutual funds. Before investing, you should consult with your financial consultant and review carefully any disclosure by the selling agent as to what monies they receive from mutual fund advisers and distributors, as well as how your financial consultant is compensated.
The Additional Payments are typically paid in fixed dollar amounts, or based on the number of customer accounts maintained by the selling or shareholder servicing agent, or based on a percentage of sales and/or assets under management, or a combination of the above. The Additional Payments are either up-front or ongoing or both. The Additional Payments differ among selling and shareholder servicing agents. Additional Payments to a selling agent that is compensated based on its customers' assets typically range between 0.05% and 0.30% in a given year of assets invested in the Fund by the selling agent's customers. Additional Payments to a selling agent that is compensated based on a percentage of sales typically range between 0.10% and 0.15% of the gross sales of the Fund attributable to the selling agent. In addition, representatives of the Fund's distributor visit selling agents on a regular basis to educate their registered representatives and to encourage the sale of Fund shares. The costs associated with such visits may be paid for by the Fund's adviser, distributor, or their affiliates, subject to applicable FINRA regulations.
More information on the FINRA member firms that have received the Additional Payments described in this section is available in the Statement of Additional Information, which is on file with the SEC and is also available on the Wells Fargo Advantage Funds website at www.wellsfargo.com/advantagefunds.
Investing in the Funds
Shares of WFVT are not offered directly to the general public. The Trust currently offers its Fund shares to separate accounts of various life insurance companies as funding vehicles for certain VA Contracts and VLI Policies (variable contracts) issued through the separate accounts by such life insurance companies. Many of the separate accounts are registered as investment companies with the SEC. When shares of WFVT are offered as a funding vehicle for variable contracts issued through such a separate account, a separate prospectus describing the separate account and the variable contracts being offered through it will accompany this prospectus. When WFVT offers Fund shares as funding vehicles for variable contracts issued through a separate account that is not registered as an investment company, a separate disclosure document (rather than a prospectus) describing the separate account and the variable contracts being offered through it will accompany this prospectus. In the future, WFVT may offer its Fund shares directly to qualified pension and retirement plans.
WFVT has entered into an agreement with the life insurance company sponsor of each separate account (a participation agreement) setting forth the terms and conditions pursuant to which the insurer will purchase and redeem shares of the Funds. In the event that WFVT offers shares of one or more Funds to a qualified pension or retirement plan, it likely will enter into a similar participation agreement. The discussion that follows reflects the terms of WFVT's current participation agreements (which do not differ materially from one another).
Shares of the Funds are sold in a continuous offering to the separate accounts to support the variable contracts. Net purchase payments under the variable contracts are placed in one or more sub-accounts of the separate accounts and the assets of each such sub-account are invested in the shares of the Fund corresponding to that sub-account. The separate accounts purchase and redeem shares of the Funds for their sub-accounts at each share's NAV without sales or redemption charges.
For each day on which a Fund's net asset value is calculated, the separate accounts transmit to WFVT any orders to purchase or redeem shares of the Fund based on the net purchase payments, redemption (surrender) requests, and transfer requests from variable contract owners that have been processed on that day. The separate account purchases and redeems shares of each Fund at the Fund's NAV per share calculated as of that day (i.e., the day the separate account processes contract owner transactions), although such purchases and redemptions may be executed the next morning. Payment for shares redeemed is made within seven days after receipt of a proper redemption order, except that the right of redemption may be suspended or payments postponed when permitted by applicable laws and regulations.
Potential for Conflict of Interest
A potential for certain conflicts exists between the interests of variable annuity contract owners and variable life insurance contract owners, or between the interests of owners of variable contracts issued by different insurance companies or through different separate accounts. A potential for certain conflicts exists between the interests of variable contract owners and participants in a qualified pension or retirement plan that might invest in the Funds. To the extent that such classes of investors are invested in the same Fund when a conflict of interest arises that might involve the Fund, one or more such classes of investors could be disadvantaged. WFVT currently does not foresee any such disadvantage to owners of variable contracts. Nonetheless, the Board of Trustees of WFVT will monitor the Funds for the existence of any irreconcilable material conflicts of interest. If such a conflict affecting owners of variable contracts is determined to exist, then each life insurance company sponsoring a separate account investing the Fund will, to the extent reasonably practicable, take such action as is necessary to remedy the conflict or eliminate the conflict as it affects owners of variable contracts it has issued. If such a conflict were to occur in connection with a Fund, one or more insurance companies might be required to withdraw the investments of one or more of its separate accounts from the Fund or to substitute shares of another mutual fund (including another Fund) for those it holds of the Fund. This might force the Fund to sell portfolio securities at a disadvantageous price.
How Your Vote Would Count
With regard to Fund matters for which the 1940 Act requires a shareholder vote, insurance companies sponsoring a separate account holding shares of a Fund vote such shares in accordance with instructions received from owners of variable contracts (or annuitants or beneficiaries thereunder) having a voting interest in that separate account. Each share has one vote and votes are counted on an aggregate basis except as to matters where the interests of one Fund may differ from another (such as approval of an investment advisory agreement or a change in a Fund's fundamental policies). In such a case, the voting is on a Fund-by-Fund basis. Fractional shares are counted. Shares held by a separate account for which no instructions are received are voted by the insurance company sponsor of the account, for or against any propositions, or in abstention, in the same proportion as the shares for which instructions have been received. Due to proportional voting, the disposition of a particular proposition could be determined by a small number of contract owners.
Exhibit F
Financial Highlights
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA Specials Values Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $9.18 $9.18 | $9.16 $9.16 | ||||||||||
Income from investment operations | ||||||||||||
Net investment income | 0.06 0.06 | 0.04 0.04 | ||||||||||
Net realized and unrealized gains or losses on investments | 2.63 2.63 | 2.62 2.62 | ||||||||||
Total from investment operations | 2.69 2.69 | 2.66 2.66 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.06) (0.06) | (0.04) (0.04) | ||||||||||
Net asset value, end of period | $11.81 $11.81 | $11.78 $11.78 | ||||||||||
Total return1 | 29.40% 29.40% | 29.06% 29.06% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $59,224 $59,224 | $11,204 $11,204 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 1.00% 1.00% | 1.25% 1.25% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 1.04% 1.04% | 1.29% 1.29% | ||||||||||
Net investment income | 0.58% 0.58% | 0.33% 0.33% | ||||||||||
Portfolio turnover rate | 44% 44% | 44% 44% |
1 | Total return does not reflect charges attributable to your insurance company's separate account. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA Fundamental Large Cap Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $12.72 $12.72 | $12.68 $12.68 | ||||||||||
Income from investment operations | ||||||||||||
Net investment income | 0.20 0.20 | 0.15 0.15 | ||||||||||
Net realized and unrealized gains or losses on investments | 4.38 4.38 | 4.38 4.38 | ||||||||||
Total from investment operations | 4.58 4.58 | 4.53 4.53 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.18) (0.18) | (0.15) (0.15) | ||||||||||
Net asset value, end of period | $17.12 $17.12 | $17.06 $17.06 | ||||||||||
Total return1 | 36.06% 36.06% | 35.75% 35.75% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $54,624 $54,624 | $72,070 $72,070 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 0.85% 0.85% | 1.10% 1.10% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 0.85% 0.85% | 1.10% 1.10% | ||||||||||
Net investment income | 1.27% 1.27% | 0.99% 0.99% | ||||||||||
Portfolio turnover rate | 35% 35% | 35% 35% |
1 | Total return does not reflect charges attributable to your insurance company's separate account. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA Growth Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $8.25 $8.25 | $8.09 $8.09 | ||||||||||
Income from investment operations | ||||||||||||
Net investment loss | (0.06) (0.06) | (0.10) (0.10) | ||||||||||
Net realized and unrealized gains or losses on investments | 3.34 3.34 | 3.29 3.29 | ||||||||||
Total from investment operations | 3.28 3.28 | 3.19 3.19 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | 01 0 | 01 0 | ||||||||||
Net asset value, end of period | $11.53 $11.53 | $11.28 $11.28 | ||||||||||
Total return2 | 39.78% 39.78% | 39.45% 39.45% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $39,713 $39,713 | $9,072 $9,072 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 1.00% 1.00% | 1.24% 1.24% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 1.02% 1.02% | 1.26% 1.26% | ||||||||||
Net investment loss | (0.57)% (0.57)% | (0.80)% (0.80)% | ||||||||||
Portfolio turnover rate | 123% 123% | 123% 123% |
1 | Amount represents less than $0.005 per share. |
2 | Total return does not reflect charges attributable to your insurance company's separate account. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA International Equity Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $9.61 $9.61 | $9.55 $9.55 | ||||||||||
Income from investment operations | ||||||||||||
Net investment income | 0.221 0.22 | 0.071 0.07 | ||||||||||
Net realized and unrealized gains or losses on investments | 1.16 1.16 | 1.27 1.27 | ||||||||||
Total from investment operations | 1.38 1.38 | 1.34 1.34 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.32) (0.32) | (0.30) (0.30) | ||||||||||
Net asset value, end of period | $10.67 $10.67 | $10.59 $10.59 | ||||||||||
Total return2 | 15.95% 15.95% | 15.47% 15.47% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $69,407 $69,407 | $891,137 $891,137 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 0.68% 0.68% | 0.89% 0.89% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 0.68% 0.68% | 0.89% 0.89% | ||||||||||
Net investment income | 2.31% 2.31% | 0.70% 0.70% | ||||||||||
Portfolio turnover rate | 205% 205% | 205% 205% |
1 | Per share amount is based on average shares outstanding during the period. |
2 | Total return does not reflect charges attributable to your insurance company's separate account. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA Omega Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $14.43 $14.43 | $14.25 $14.25 | ||||||||||
Income from investment operations | ||||||||||||
Net investment income | 0.13 0.13 | 0.11 0.11 | ||||||||||
Net realized and unrealized gains or losses on investments | 6.09 6.09 | 6.00 6.00 | ||||||||||
Total from investment operations | 6.22 6.22 | 6.11 6.11 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.23) (0.23) | (0.17) (0.17) | ||||||||||
Net asset value, end of period | $20.42 $20.42 | $20.19 $20.19 | ||||||||||
Total return1 | 43.97% 43.97% | 43.58% 43.58% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $59,807 $59,807 | $33,196 $33,196 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 0.76% 0.76% | 1.00% 1.00% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 0.76% 0.76% | 1.00% 1.00% | ||||||||||
Net investment income | 0.86% 0.86% | 0.63% 0.63% | ||||||||||
Portfolio turnover rate | 28% 28% | 28% 28% |
1 | Total return does not reflect charges attributable to your insurance company's separate account. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Evergreen VA Core Bond Fund | Class 1 | Class 2 | ||||||||||
Net asset value, beginning of period | $7.85 $7.85 | $7.88 $7.88 | ||||||||||
Income from investment operations | ||||||||||||
Net investment income | 0.31 0.31 | 0.29 0.29 | ||||||||||
Net realized and unrealized gains or losses on investments | 0.33 0.33 | 0.33 0.33 | ||||||||||
Total from investment operations | 0.64 0.64 | 0.62 0.62 | ||||||||||
Distributions to shareholders from | ||||||||||||
Net investment income | (0.17) (0.17) | (0.15) (0.15) | ||||||||||
Net asset value, end of period | $8.32 $8.32 | $8.35 $8.35 | ||||||||||
Total return1 | 8.17% 8.17% | 7.89% 7.89% | ||||||||||
Ratios and supplemental data | ||||||||||||
Net assets, end of period (thousands) | $86 $86 | $30,251 $30,251 | ||||||||||
Ratios to average net assets | ||||||||||||
Expenses including waivers/reimbursements but excluding expense reductions | 0.68% 0.68% | 0.93% 0.93% | ||||||||||
Expenses excluding waivers/reimbursements and expense reductions | 0.68% 0.68% | 0.93% 0.93% | ||||||||||
Net investment income | 3.76% 3.76% | 3.52% 3.52% | ||||||||||
Portfolio turnover rate | 510%2 510% | 510%2 510% |
1 | Total return does not reflect charges attributable to your insurance company's separate account. |
2 | Portfolio turnover rate includes mortgage dollar roll activity. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT C&B Large Cap Value Fund | ||||||||||||
Beginning Net Asset Value Per Share | $7.03 $7.03 | |||||||||||
Net Investment Income (Loss) | 0.12 0.12 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 1.88 1.88 | |||||||||||
Distribution from Net Investment Income | (0.12) (0.12) | |||||||||||
Ending Net Asset Value Per Share | $8.91 $8.91 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 1.56% 1.56% | |||||||||||
Gross Expenses | 1.63% 1.63% | |||||||||||
Net Expenses | 1.00% 1.00% | |||||||||||
Total return1 | 28.90% 28.90% | |||||||||||
Portfolio Turnover Rate | 15% 15% | |||||||||||
Net Assets at End of Period (000's omitted) | $14,726 $14,726 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT International Core Fund | ||||||||||||
Beginning Net Asset Value Per Share | $4.61 $4.61 | |||||||||||
Net Investment Income (Loss) | 0.09 0.09 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 0.47 0.47 | |||||||||||
Distribution from Net Investment Income | (0.14) (0.14) | |||||||||||
Ending Net Asset Value Per Share | $5.03 $5.03 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 1.63% 1.63% | |||||||||||
Gross Expenses | 2.04% 2.04% | |||||||||||
Net Expenses | 1.00% 1.00% | |||||||||||
Total return1 | 12.66% 12.66% | |||||||||||
Portfolio Turnover Rate | 230% 230% | |||||||||||
Net Assets at End of Period (000's omitted) | $18,575 $18,575 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT Large Company Core Fund | ||||||||||||
Beginning Net Asset Value Per Share | $9.55 $9.55 | |||||||||||
Net Investment Income (Loss) | 0.12 0.12 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 3.37 3.37 | |||||||||||
Distribution from Net Investment Income | (0.21) (0.21) | |||||||||||
Ending Net Asset Value Per Share | $12.83 $12.83 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 0.84% 0.84% | |||||||||||
Gross Expenses | 1.89% 1.89% | |||||||||||
Net Expenses | 1.00% 1.00% | |||||||||||
Total return1 | 37.01% 37.01% | |||||||||||
Portfolio Turnover Rate | 18% 18% | |||||||||||
Net Assets at End of Period (000's omitted) | $10,597 $10,597 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT Large Company Growth Fund | ||||||||||||
Beginning Net Asset Value Per Share | $6.28 $6.28 | |||||||||||
Net Investment Income (Loss) | 0.04 0.04 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 2.68 2.68 | |||||||||||
Distribution from Net Investment Income | (0.03) (0.03) | |||||||||||
Ending Net Asset Value Per Share | $8.97 $8.97 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 0.55% 0.55% | |||||||||||
Gross Expenses | 1.20% 1.20% | |||||||||||
Net Expenses | 1.00% 1.00% | |||||||||||
Total return1 | 43.38% 43.38% | |||||||||||
Portfolio Turnover Rate | 27% 27% | |||||||||||
Net Assets at End of Period (000's omitted) | $69,506 $69,506 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT Small Cap Growth Fund | ||||||||||||
Beginning Net Asset Value Per Share | $4.16 $4.16 | |||||||||||
Net Investment Income (Loss) | (0.03) (0.03) | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 2.22 2.22 | |||||||||||
Distribution from Net Investment Income | 0.00 0.00 | |||||||||||
Ending Net Asset Value Per Share | $6.35 $6.35 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | (0.69)% (0.69)% | |||||||||||
Gross Expenses | 1.26% 1.26% | |||||||||||
Net Expenses | 1.20% 1.20% | |||||||||||
Total return1 | 52.64% 52.64% | |||||||||||
Portfolio Turnover Rate | 75% 75% | |||||||||||
Net Assets at End of Period (000's omitted) | $185,345 $185,345 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT Small/Mid Cap Value Fund | ||||||||||||
Beginning Net Asset Value Per Share | $4.95 $4.95 | |||||||||||
Net Investment Income (Loss) | 0.08 0.08 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 2.87 2.87 | |||||||||||
Distribution from Net Investment Income | (0.07) (0.07) | |||||||||||
Ending Net Asset Value Per Share | $7.83 $7.83 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 1.39% 1.39% | |||||||||||
Gross Expenses | 2.56% 2.56% | |||||||||||
Net Expenses | 1.14% 1.14% | |||||||||||
Total return1 | 60.18% 60.18% | |||||||||||
Portfolio Turnover Rate | 45% 45% | |||||||||||
Net Assets at End of Period (000's omitted) | $12,018 $12,018 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |
Twelve Months Ended December 31, 2009 (audited) | ||||||||||||
Wells Fargo Advantage VT Total Return Bond Fund | ||||||||||||
Beginning Net Asset Value Per Share | $9.70 $9.70 | |||||||||||
Net Investment Income (Loss) | 0.42 0.42 | |||||||||||
Net Realized and Unrealized Gain (Loss) on Investments | 0.72 0.72 | |||||||||||
Distribution frmo Net Investment Income | (0.46) (0.46) | |||||||||||
Distribution from Net Realized Gains | (0.04) (0.04) | |||||||||||
Ending Net Asset Value Per Share | $10.34 $10.34 | |||||||||||
Ratios to Average Net Assets (Annualized) | ||||||||||||
Net Investment Income (Loss) | 4.07% 4.07% | |||||||||||
Gross Expenses | 1.20% 1.20% | |||||||||||
Net Expenses | 0.85% 0.85% | |||||||||||
Total return1 | 11.99% 11.99% | |||||||||||
Portfolio Turnover Rate | 580% 580% | |||||||||||
Net Assets at End of Period (000's omitted) | $95,134 $95,134 |
1 | Total return calculations do not include any sales charges, and would have been lower had certain expenses not been waived or reimbursed during the periods shown. Returns for periods less than one year are not annualized. |